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II.  S.  returns  (miicc  1843)  "11  given  (or  the  latlcr  half  of  ohc  year  and  Ihe  former  lialf  of  the  next,  making  up  a  "  Fiscal  Year."     The  fiscal  yea 
il  1842  included  the  last  quarter  of  one  year  and  the  first  three  quarters  of  the  next.     British  returns  (shown  by  dotted  lines)  arc  for  entire  years 
Perpendicular   dotted   lines   divide    the  seventy  years  into  fifteen  groups,    during  which   the  import  duties  were  approximately  uniform.       For    fnl 
-  -'  c  pngcs  55-65,  143-146. 


ECONOMIC  AND  INDUSTRIAL 
DELUSIONS 


A  DISCUSSION  OF  THE  CASE  FOR 
PROTECTION 


ARTHUR  B.  AND  HENRY  FARQUHAR 


G.  P.  PUTNAM'S  SONS 

NEW    YORK  LONDON 

■^^   WESTTWENTY-THIKT)   STKEET  24   BEDFORD  STREET,   STRAND 

(JTbe  ^nithtrbotkcr  |lress 
1891 


Copyright,   i8gt 

BY 

ARTHUR  H.  AND  HENRY  FARQUHAR 


Electrotyped,  Printed,  and  Bound  by 

tbc  'Rntchcrbocftcr  press,  -Hew  2?orft 
G.  P.  Pttnam's  Sons 


nss 


PREFACE. 


In  September,  1889,  I  was  honored  with  a  request  from 
the  Reform  Club  of  New  York  City  for  an  address  on  the 
great  economic  question  of  the  day.  The  time  that  could 
be  so  occupied,  by  the  usage  of  the  Club,  was  limited  ; 
and  yet  the  example  set  me  by  the  brilliant  and  distin- 
guished speakers  who  had  already  addressed  it,  as  well  as 
the  vital  importance  of  the  question  itself,  made  an  ex- 
tended preliminary  study  necessary.  I  thus  found  myself 
in  possession,  when  the  time  arrived,  of  considerably  more 
material  than  could  be  used  for  the  original  purpose,  and 
the  present  volume  is  the  result.  The  responsibility  for 
its  production  my  friends  of  the  Club  will  have  to  share 
with  me,  since  it  grew  out  of  their  invitation.  Their 
willingness  to  hear  me  unquestionably  arose  from  a  con- 
viction that  the  sincere,  experience-tested  conclusions  of  a 
thoroughly  practical  business  man — my  sole  title  to  a 
hearing — are  a  matter  of  public  interest.  That  conviction, 
shared  as  it  is  by  others  of  my  fellow-citizens,  is  my  best 
excuse  for  seeking  a  larger  audience. 

The  address  was  delivered  at  a  meeting  of  the  Reform 
Club  on  the  14th  of  February,  1890,  and  forms  part  of  the 
first,  third,  and  fourth  chapters  to  follow.  The  third 
chapter  contains  also  a  study  of  comparative  statistics  by 
my  brother,  bringing  out  the  relation  between  the  coun- 
try's merchandise  export  and  its  import  duties.  A  similar 
study  in  the  fifth  chapter,  connecting  ownership  of  mer- 


20?9S0 


i  V  PKEFA  CE. 

chant-vessels  with  duty-rates,  and  another  in  the  seventh, 
relating  to  crops  and  prices,  were  communicated  by  him  to 
the  American  Association  for  the  Advancement  of  Science 
at  its  1 89 1  meeting.  The  discussion  of  True  Independence, 
and  that  of  Silver  and  Democracy  (Chapters  V.,  XI.)  were 
originally  contributed  to  the  Neiu  York  Saturday  Globe. 
Other  republications  are  duly  noted  in  their  place. 

Discoveries  are  rare  in  economic  inquiry  ;  and  no  great 
abundance  of  points,  at  the  same  time  novel  and  valuable, 
will  be  looked  for  in  such  a  work  as  this.  For  that  reason 
I  have  not  thought  it  necessary  to  cumber  these  pages 
with  acknowledgment  ;  although  due  recognition  of  my 
gifted  compatriots  who  have  skilfully  and  successfully  dis- 
cussed the  subject — Wells,  Sumner,  Perry,  Walker,  New- 
comb,  Taussig,  Henry  George,  Horace  White,  and  others 
— is  more  a  pleasure  than  a  task,  and  no  one  whose  aim  is 
to  make  political  economy  popular  could  willingly  omit 
the  homage  earned  by  that  keen  and  captivating  master 
of  this  art,  Fr^d^ric  Bastiat.  My  obligations  to  Mr. 
Edward  Atkinson,  for  kind  assistance  with  the  Iron  and 
Tin-Plate  discussions,  opening  Chapter  X.,  call  for  particu- 
lar notice  ;  and  I  have  also  to  thank,  for  constant  interest 
as  well  as  active  aid,  my  near  neighbor  and  honored 
friend,  Chauncey  F.  Black — worthy  son  of  a  noble  father, 
the  illustrious  Judge,  type  of  the  "  high-minded  men  "  who 
truly  constitute  a  State,  whose  friendship  shall  ever  be  to 
me  a  priceless  memory. 

To  the  statistical  and  historical  notes  contributed  by 
my  brother,  some  of  which  are  embodied  in  every  chap- 
ter, I  venture  to  attach  a  particular  value  ;  partly  because 
they  have  some  claim  to  originality,  and  partly  because 
they  give  the  best  possible  support  to  the  purpose  I  have 
had  constantly  in  view  :  to  present  such  conclusions,  and 
such  only,  as  have  been  approved  by  the  test  of  practical 


PREFACE.  V 

experience.  It  has  been  found  possible  to  compose 
highly  able,  and  even  highly  valuable,  treatises  in  which 
political  economy  has  been  deduced,  like  geometry,  from 
a  few  fundamental  axioms  ;  but  so  long  as  we  have  to 
deal  with  men,  and  not  mere  "  economic  units,"  so  long 
will  the  inductive  treatment  of  these  problems  command 
more  confidence  than  the  deductive.  Its  admitted  diffi- 
culty, in  the  care  and  scrutiny  necessary  to  bring  out  of  a 
mob  of  loose  facts  an  army  of  pertinent  data,  is  a  reason 
why  this  treatment  should  be  more,  rather  than  less  fol- 
lowed by  economic  students. 

Notwithstanding  the  important  part  my  brother  has 
had  in  the  preparation  of  this  work,  it  is  addressed  to  the 
reader  in  my  name  alone.  The  notes  out  of  which  it  grew 
were  so  addressed  and  we  have  thought  best  to  retain  the 
same  form  for  the  completed  volume.  No  one  need  hesi- 
tate to  allow  every  page,  every  line  it  contains,  whatever 
Aveight  my  business  knowledge,  experience,  and  standing 
can  give  it,  or  to  throw  on  me  an  undivided  responsibility 
for  the  whole,  because  of  the  aid  of  which  I  have  been 
fortunate  enough  to  avail  myself. 

It  is  generally  better  to  leave  motives  to  find  their  own 
vindication,  than  to  fill  much  space  in  vindicating  them  : 
but  I  cannot  refrain  from  putting  emphatically  on  record, 
at  the  very  outset,  the  fact  that  political  considerations 
have  had  no  part  whatever  in  dictating  my  course  or  my 
mental  attitude  on  this  question.  So  far  as  I  ever  felt 
such  influence,  I  was  for  a  long  time  led  in  a  direction 
diametrically  opposite  to  the  one  here  followed.  I  never 
cast  a  Democratic  vote  in  a  national  election,  until  1888; 
and  I  even  advocated  a  few  years  earlier,  in  a  shipping 
convention  held  in  Baltimore,  a  resolution  favoring  stimu- 
lation of  our  merchant  marine  b}-  government  subsidies. 
The  following  paragraphs  from  a  letter  published  in  the 


Vi  PKEFA  CE. 

New  York  Tiuus,  r^cbruary,  1890,  defended  my  course  at 
that  convention  : 

"  You  must  bear  in  mind  one  wide  difference  between  1885 
and  now,  in  the  circumstances  of  our  country.  Then  there 
was  no  strong  movement  to  bring  us  the  reform  from  which 
steamship  lines  to  Chili  and  the  Argentine  would  be  certain  to 
result — free  admission  to  our  ports  of  their  principal  products. 
No  great  party  was  committed  to  it  or  realized  its  importance. 
One  of  them  promised  to  '  revise  the  tariff  and  correct  its 
inequalities,'  which  might  mean  anything,  and  therefore  meant 
nothing.  The  other  gave  us  a  platform  that  was  claimed 
equally  by  hide-bound  protectionists  and  enthusiastic  free- 
traders, looking  in  both  directions  alike.  The  election  turned 
mainly  on  the  personal  character  of  the  candidates,  and  was 
very  nearly  indecisive.  Subsidies  appeared  then  the  only 
hope  of  the  exporter,  on  whom  our  tariff  laws  bore  with  such 
severity  as  to  entitle  him   to   special  relief  from  some   source. 

"On  the  appearance  of  the  Presidential  message  of  1887, 
however,  I  was  one  of  those  who  saw  before  the  country  a  clear 
policy  of  statesmanship,  which  was  destined  to  remain  at  the 
front  until  its  certain  triumph,  however  remote  that  triumph 
might  be.  Then  I  saw  that  the  true  interests  of  exporting 
manufacturers,  which  had  won  the  President's  advocacy,  were 
committed  to  the  hands  of  a  powerful  party.  There  was  at 
last  open  before  us  the  possibility  of  an  enduring  benefit,  instead 
of  a  mere  makeshift,  and  since  that  day  my  voice  has  never 
been  heard  in  appeal  for  subsidies. 

"  The  condition  of  public  opinion,  growdng  daily  sounder 
and  healthier  on  commercial  questions,  gives  the  subject  a 
very  different  appearance  from  the  one  it  wore  five  years  ago  ; 
but  even  were  that  not  the  case  I  would  not  be  ashamed  to 
say,  in  the  words  of  the  world's  great  citizen,  Gladstone,  when 
accused  of  inconsistency  upon  the  Irish  question  :  '  I  am 
older  and  wiser  '  " 

A.  B.  FaR(^UHAR. 
York,  rK.\.\sYLVA.\iA, 

September,  1S91. 


CONTENTS. 


-The  Case  for  Protection  Examined 
Feeble  and  Powerful  Delusions 
Instances  of  Political  Delusions 
The  Case  Analyzed 
Quibbles  and  Juggles  Illustrated 
Emotional  Appeals 


of  the  Tariff 


II. — Abuse  of  Party  Allegiance 

Mutability  of  Party  Issues 
Career  of  the  Republican  Party 
Why  the  Party  Became  a  Champion 
Republican  Platform  of  1888    . 
Who  Are  the  True  Republicans  ? 
Ex-Confederates 
Hatred  of  England  . 
Wastefulness  of  War 
Inutility  of  Defensive  Measures 
Other  Evils  Due  to  "War    . 
Protection  and  National  Hostilitv 


III. — Balance  of  Trade  and  Currency  Supply  . 

Effects  of  a  "  Favorable  "  Balance    ..... 

How  the  Balance  is  Kept  in  the  United  States 

Commercial  Development  of  the   United    States    for    Seventy 
Years,  as  Influenced  by  Import  Duties 
Table 

Description  of  the  Chart — Tariff  Rates     .... 

Description  of  the  Chart — Exports  ar.d  Balance  of  Trade  . 

Effect  of  the  Tariff  on  Our  Commerce — Instances  of  Misleading 
Tests  ......... 

A  Better  Test  of  the  Tariff  Effect 


2 

4 
7 

9 

II 

13 
14 

16 

19 
21 

31 
38 
41 
42 

44 
46 

47 

49 
50 
51 

54 
58 
61 
63 

65 
69 


Vlll 


CONTENTS. 


("omparison  of  iJuties  an;!  ('ommerce,  by  Averages  of  ( 

of  Years    .         ,         .         .         . 
Effects  Stated  as  Laws 
Need  of  Demonstrating  the  Export  Law 
Examples  of  Assumption  Overthrown  by  the  P'xport  Law 
Keeping  Money  in  the  Country 
Tariffs  and  Panics    .... 
Testimony  of  Hugh  McCuUocli 

"  The  Reverses  of  1837  " 

"  Results  of  the  Speculative  Mania' 

"  After  the  Panic  of  1837  "  . 

"The  Panic  of  1857"  . 

"  The  Financial  Troubles  of  1S73  " 

IV. — Paternal  Government  and  Industrial  Progress, 

Encouragement  of  Iron  and  Steel  Manufacturing 
Instance  from  the  Agricultural-Implement  Business 
Examples  of  Encouraging  Other  Products 
Growth  of  Manufacturing  Industry,  by  the  Census 
Why  the  Manufacturers  Hang  Together  . 
Diversifying  Our  Industries       .... 
Establishing  New  Industries     .... 
Instance  of  Steel  Rails      ..... 
Instances  of  Growth  despite  Discouragement     . 
Supposed  Cause  of  Our  Industrial  Progress 
Mexico  and  New  South  Wales 
New  South  Wales  and  Victoria 
The  Real  Cause        ...... 

V. — Foreign  Countries  as  Commercial  Rivals    . 

Governing  Our  Policy  by  "  What  England  does  not  Want  " 

Contrast  between  the  Real  and  the  Fancied  England 

Some  Foreign  Commerce  Necessary 

Commercial  Treaties 

Reciprocity       ..... 

Subsidies  to  Merchant  Vessels  . 

Secretary  Windom's  Reports     . 

American  Experience  with  Subsidies 

History  of  our  Mercantile  Marine  for  Seventy  Years 

Development  of  the  British  Mercantile  Marine 

Influence  of  Tariff  Rates  Tested 

The  Tariff  Unfavorable  to  Our  Coastwise  Trade 


CONTENTS.  IX 

PAGE 

Difference  from  Great  Britain  in  Economic  Conditions      .         •  151 
Industrial  Independence  .         .         .         .         .         .         .         -155 

Protection  a  Foe  to  True  Independence    .....  157 

VI. — Prices  vs.  Wages 163 

Protectionist  Efforts  to  Persuade  the  Working  Man            .         .  164 
Does  Free  Trade  Equalize  Wages?  .         .                   .         .         .165 

How  Wages  are  Fixed     .         .         .         .         .         .         .         .170 

Wages  in  Other  Countries         .         .                   .         .         .         •  I73 

Labor  and  "  Trusts  "        ........  175 

The  Immigration  Test      ........  177 

The  Wages  Question  from  Another  Standpoint          .         .         .  180 

Control  of  Markets  by  Cheap  Labur          .....  181 

Labor  Not  Overpaid  in  the  United  States          ....  183 

Two  Ways  of  Expressing  the  Same  Idea  .....  189 

The  Labor  That  "  Needs  "  Protection       .....  187 

Interest  of  the  Laboring  Class  in  Mechanical  Improvements      .  i8g 

Types  of  "Pauper"  Labor      .......  igi 

"  Invasion  "  of  Our  Markets  by  Cheap  Goods    ....  192 

Danger  of  Increased  Prices,  with  Foreign  "Control"  of  Our 

Markets     ..........  194 

VII. — The  Home  Market 198 

In  What  Way  Foreign  Competitors  are  Kept  Out      .         .         .  200 

Scarcity,  Surplus,  and  Prices  of  Staples     .....  205 

Prices  as  Influenced  by  the  Exclusive  Home  Market          .         .  208 

Are  Laws  Needed  to  Send  the  Producer  to  His  Best  Market  ?   .  210 

Instance  of  a  Country  Neighborhood  in  Maryland  .  .  .  212 
None  but  the  Farmer  Benefited  by  Home  Markets  .  .  .214 
Customers  Prevented  from  Becoming  Competitors     .          .         .215 

Policy  of  Hiring  People  Not  to  Compete  .....  220 

Trust  to  Common-Sense  ........  222 

VIII. — The  Ideal  "  Revenue  with  Incidental  Pro- 
tection " 

Distinction  between  Revenue  and  Protective  Tariffs 
Necessity  for  a  Revenue  Tariff  .... 

Minor  Motives  for  High  Taxation    .... 
The  Nation's  Debt  to  the  Soldier      .... 
Gratuities  to  Owners  of  Silver  Mines 
A  Com.mon  Injustice  in  All  Unnecessary  Exjienditure 
Other  Qualities  of  the  Ideal  Tariff    .... 
An  Appeal  from  Fancy  to  Reason     .... 


223 
225 
227 
230 
234 
237 
241 
242 
246 


CONTENTS. 


IX. — Protection  and  Agriculture  . 

Open  Letter  to  American  Farmers,  No.  i 

Farmer  and  Farm-Implement  Maker  United  in  In 

Can  We  Accumulate  Money  by  Taxing  Imports? 

Exportations  Diminish  along  with  Importations 

Do  Import  Duties  Give  Us  a  Home  Market  ? 

How  Foreign  Sales  are  Restricted 

Pretence  that  the  Duty  is  Paid  by  the  Foreigner 

Points  to  be  Tested  and  Pitfalls  to  be  Escaped 

Present  Agricultural  Depression    . 

Duties  on  Farm  Produce  in  the  McKinley  Bill 

The  Other  Side  of  the  Account     . 

Secretary  Rusk's  Bid     ..... 

A  Confidence  Game       ..... 
Open  Letter  to  American  P'armers,  No.  2 

What  is  Claimed  for  the  McKinley  Tariff 

The  "  Reciprocity  Treaties  " 

A  Borrowed  Policy        ..... 

The  Sub-Treasury  and  Loan  Schemes    . 

Tampering  with  the  Currency 

Alliance  of  the  "  Alliance  "  with  the  Protectionists 

X. — Special  Discussions 

True  Protection  for  the  Iron  and  Steel  Industry 
Comparison  of  British  and  American  Prices  . 
An  Estimate  of  the  Total  Cost 
Feeble  Plea  for  the  Duties    .... 
Changes  of  Profound  Significance 
A  Pertinent  Question  Repeated 
Pretences  Exposed  by  Census  Returns  . 
America  could  have  Mastered  the  World 
Other  Industries  Oppressed  .... 
Protecting  Foreigners  at  Our  Own  Expense  . 

The  Tin-Plate  Question  ..... 
The  Case  as  It  Stands  ..... 
A  Fallacious  Plea  ..... 

The  Workmen  would  be  Imported 
When  will  the  People's  Eyes  be  Opened  ? 
Postscript,  1891     ...... 

"  Drawbacks  to  the  Drawbacks  "... 

Free  Raw  Material  ...... 

What  Is  "  Raw  Material  "  ?      .... 


CONTENTS. 


XI 


Plundering  tlie  Farmers    ...... 

Second  Letter  to  the  "  Home  Market"  Club  of  Boston, 
A  Specimen  Question        ...... 


XI.— The  Silver  Question      .... 
Is  Bi-MetalHsm  Possible?  .... 

Bi-Metallic  Coinage  by  International  Agreement 
Present  and  Past  Condition  of  the  Coinage 
The  "Crime"  of  1873      . 
Legislation  in  Favor  of  the  Debtor 
The  Cry  for  More  Money 
Protection  to  the  Mine-Owners 
Free-Coinage  Probabilities 
.Silver  and  Democracy 
Devices  for  Increasing  the  Circulation  of  Silver 


Mass. 


PAGE 

337 
340 
351 

356 
359 
363 
367 
373 
376 
381 
386 
391 
399 
405 


Index 


415 


ILLUSTRATIVE    CHARTS. 

To  face 
COMMERCIAT,     DEVELOPMENT    OF     THE     UNITED    STATES 

IN  Seventy  Years,  as  Influenced  rv  Rate  of 
Import  Duties         .......    Title 

Value  of  Exported  Merchandise  and  Merchandise 
Balance  per  Capita,  Compared  with  Rates  of 
Import  Duty  ........       74 

Rates  of  Import  Duty  and  Tonnage  per  Capita  of 

Vessels  in   Foreign  and  in  Coastwise   Trade,     150 


ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 


CHAPTER  I. 

THE    CASE   FOR    PROTECTION   EXAMINED. 

It  is  the  nature  of  delusions  to  group  themselves  to- 
gether and  lend  support  to  each  other,  so  that  he  who 
would  strike  down  one  finds  himself  obliged  to  attack  a 
whole  compact  body  of  them,  just  as,  by  driving  off  one 
wasp,  he  might  bring  the  whole  colony  about  his  ears.  It 
is  the  nature  of  delusions  to  yield  their  victim  a  helpless 
prey  to  some  schemer  who  draws  a  profit  from  his  weak- 
ness ;  and  but  for  this  trait  about  them,  few  or  none  would 
be  fixed  or  dangerous.  As  the  Economic  and  Industrial 
Delusions  with  which  I  have  to  take  issue,  those  by  which 
the  country  has  most  suffered  and  over  which  a  victory 
would  be  most  precious  to  it,  share  this  nature — agglome- 
rating themselves  into  a  semblance  of  system  and  surviving 
by  the  strength  of  the  interests  they  promote — it  has  not 
disheartened  me  to  see  myself  confronted  with  a  big,  un- 
wieldy mass  of  them,  formidable,  like  the  plague  of  frogs 
or  the  Australian  rabbit  pest,  by  its  very  bulk.  From  that 
monstrous  mass  I  have  essayed  to  detach  the  more  con- 
spicuous members — to  prove  them,  severally  and  jointly, 
delusions  and  not  verities.  The  task  of  exposing  pre- 
tences, empty  or  plausible,  of  stripping  the  disguise  from 

I 


2  ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

falsehood  and  setting  up  a  guard  against  the  misguiding 
solicitations  of  sentiment,  is  no  light  one.  Complete 
success  in  it  is  impossible,  if  only  from  the  multiplicity  of 
the  forms  which  Delusion  takes.  Any  success  at  all, 
however,  is  worth  striving  after  ;  and  possibly  this  dis- 
cussion, even  if  it  fail  to  bring  many  converts  to  the 
"  mourner's  bench,"  may  here  and  there,  perhaps,  incite 
to  a  candid  study  of  the  question,  some  mind  now  steeped 
in  prejudice.  If  it  do  no  more  than  that,  it  will  repay  the 
trouble  it  costs. 

FEEBLE    AND    POWERFUL    DELUSIONS. 

Why  are  some  delusions  quite  innocuous  and  fleeting, 
mere  fantastic  frost-pictures,  dissolving  under  the  first 
sunbeam,  while  others  are  so  deeply  rooted  and  firmly 
braced  that  tedious  years  of  doubtful  struggle  or  throes 
of  bloody  revolutions  are  needed  to  free  us  of  them  ? 
The  latter  class  may  be  as  manifestly  groundless,  and  not 
a  whit  more  plausible  than  the  former.  But  they  have, 
nevertheless,  an  incontestable  advantage,  whose  nature 
and  whose  effectiveness  an  illustration  will  help  to  show. 

A  few  years  ago  the  newspapers  gave  considerable 
space  to  the  performance  of  an  elderly  colored  gentleman, 
who  appeared  in  divers  and  sundry  places  as  the  apostle 
of  the  time-honored  but  now  unfashionable  doctrine  that 
"  the  Sun  do  move."  With  the  arguments  by  which  he 
supported  this  doctrine  I  have  no  present  concern  ;  I 
merely  ask  attention  to  the  treatment  accorded  him.  He 
found  no  adherents,  none  to  examine  his  proofs,  none 
disposed  even  to  enter  the  lists  with  him — on  all  sides 
nothing  but  ridicule.  But  what  made  the  doctrine  absurd 
and  its  apostle  ridiculous  ?  Was  it  the  untruth  they  pro- 
claimed ?  It  is  quite  safe  to  say  that  not  one  in  a  hundred 
of  those  who  laughed  loudest  at  poor  Jasper  could  have 


THE   CASE  FOR  PROTECTION  EXAMINED.  3 

given  the  reason  why  the  sun  is  believed  to  be  so  much 
heavier  than  the  earth,  that  it  does  not  move,  but  causes 
movement.  The  sun  is,  in  fact,  the  hghter  of  the  bodies, 
bulk  for  bulk  ;  and  I  fear  that  the  majority,  even  of  the 
well  educated  and  thoughtful,  would  be  puzzled  to  tell 
how  it  is  known  to  have  one  fourth  rather  than  one  mil- 
lionth of  our  planet's  density.  No,  his  misfortune  came 
not  from  the  falsity  of  what  he  taught,  nor  from  anything 
unwelcome  or  incomprehensible  about  it.  The  weakness 
that  exposed  him  without  supporters  to  the  jeers  of  an 
unsympathetic  world  was  simply  that  there  was  in  his 
teaching  no  money  for  anybody.  How  different  would 
all  have  been  if  some  man  or  group  of  men  were  making 
a  snug  little  sum  by  the  inculcation  of  the  belief  that 
"  the  Sun  do  move."  The  preacher  of  the  doctrine  would 
then  have  been  supplied  with  golden  reasons  for  stead- 
fastness in  his  faith  and  zeal  in  its  propagation  ;  or,  sup- 
posing him  inaccessible  to  such  influences,  he  could  have 
found  encouragement  on  every  hand  in  the  ardent  co- 
adjutors raised  up  for  him  wherever  they  would  do  most 
good.  It  would  easily  and  instantly  have  been  proved 
that  the  teachings  of  our  present  race  of  astronomers  were 
but  babblings  of  vain  theorists,  and  the  potent  aid  of 
ridicule  have  been  turned  against  them  by  the  able  news- 
paper editors  as  effectively  as  now  against  poor  Jasper 
himself.  Under  guidance  of  their  insinuations  it  would 
have  been  widely  believed  that  the  astronomers  were 
themselves  corrupt,  receiving  pay  from  some  imagined 
source  for  teaching  as  they  did.  Patriotism  or  piety 
would  finally  have  been  invoked,  if  the  subsidy  held  out, 
and  the  cause  identified  with  that  of  country  or  faith  ;  the 
feebleness  of  the  logical  connection  being  concealed  under 
bold  assertion  and  violent  appeal  to  passion. 

This  is  no  ideal  picture.     Its  truth  is  shown   in   too 


4  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

many  instances  ;  and  there  has  hardly  been  any  absurdity 
too  glaring,  or  inhumanity  too  cruel,  to  furnish  one.  In 
the  very  case  of  modern  astronomical  theory,  against 
which  the  Church,  Catholic  and  Lutheran  alike,  flew  at 
once  to  arms  on  its  publication  in  1 543,  does  any  one  believe 
that  the  older  doctrine  could  have  held  its  place  so  stub- 
bornly, could  have  retained  strength  enough  to  burn  Bruno 
and  humiliate  Galileo  more  than  half  a  century  later,  if  the 
ecclesiastical  body  had  not  believed  its  worldly  interests 
involved  ?  When  another  century  had  passed,  and  it  was 
discovered  that  churches  could  be  supported  without  teach- 
ing that  the  sun  was  a  satellite  of  the  earth — in  other 
words,  that  promises  of  post-mortem  payment  in  heavenly 
blessings  still  found  sale  for  ready  money — the  opposition 
became  reconciled.  Every  quack  medicine  has  a  similar 
tale  to  tell.  The  profit  it  makes  for  its  compounder  is 
sufficient  to  urge  him  to  great  efforts  in  advertising,  and 
a  moderate  outlay  will  secure  a  loud  chorus  to  sing  its 
praise  ;  the  public  meekly  pays  the  cost  and  hugs  its 
deluder  to  its  bosom,  until  it  either  gains  more  knowledge 
or  hears  the  voice  of  some  more  skilful  quack  singing  a 
sweeter  carol  into  its  willing  and  ample  ear.  I  need  not 
cite  examples  ;  their  name  is  Legion  ;  not  a  reader  but 
can  at  the  moment  recall  a  multitude  of  them,  whose 
instructive  history  many  chapters  would  not  suffice  to 
recount.  I  introduce  this  familiar  illustration  merely  to 
enforce  by  it  the  well-known,  but  not  too  well-known, 
lessons :  what  kind  of  a  mind  our  public  has,  and  how 
little  the  wide  acceptance  of  a  belief  avails  in  proving  its 
truth. 

INSTANCES    OF    POLITICAL    DELUSIONS. 

Can  it  in  the  least  surprise  us  to  find  the  same  infec- 
tion, of  sophistries  and  fallacies  and  absurdities  gravely 


THE    CASE   FOR   PROTECTION  EXAMINED.  5 

advanced  and  upheld  because  of  the  pecuniary  profit  in 
them  for  certain  men,  in  the  political  as  in  the  business 
world  ?  Some  sort  of  a  case  must  have  been  made  out 
on  behalf  of  the  French  nobility  just  before  the  great 
outbreak  a  hundred  years  ago.  Few  can  remember  what 
it  was,  but  all  know  that  they  were  growing  rich  by  legal- 
ized plunder  of  the  people — or,  worse  yet,  in  their  frivoli- 
ties and  vices  were  wasted  the  sums  wrung  from  the 
popular  necessities ;  that  the  state  treasury  was  empty 
and  credit  exhausted  ;  that  these  nobles  were  ever  ready 
with  such  arguments  and  excuses  as  they  could  lay  hold 
of  to  uphold  them  in  refusing  to  bear  their  part,  or  any 
part,  of  the  general  burden  ;  and  that  finally,  sophistries 
— and  nobles  themselves — were  swept  away  by  the  popu- 
lace they  had  despised  and  trampled  on.  We  have 
almost  forgotton  the  reasons  promulgated  by  and  for  the 
owners  of  the  English  "  rotten  boroughs "  against  any 
reform  of  this  abuse,  for  more  than  forty  years  after  it 
first  roused  the  attention  of  William  Pitt.  But  we  may 
be  sure  there  were  plenty  of  them ;  and  they  were  suffi- 
cient to  maintain  the  iniquitous  system  under  which  the 
famed  "  Old  Sarum,"  a  place  deserted  by  all  inhabitants, 
was  allowed  to  return  two  members  to  every  Parliament 
by  mere  nomination  of  the  proprietor,  while  the  great 
city  of  Birmingham  was  disfranchised.  Here,  too,  when 
at  last  the  injustice  could  be  no  longer  borne,  force  was 
required  to  carry  the  day  for  the  people's  cause ;  the 
House  of  Lords  resisted  until  1832,  and  then  yielded 
only  under  a  threat  to  reverse  its  majority  by  increasing 
its  numbers.  Similar  in  character  were  the  well-remem- 
bered pleas  so  recently  made  for  the  institution  of  slavery 
in  our  own  country,  before  it  hurled  itself  to  a  similar 
violent  death.  Of  course,  it  was  "  to  the  best  interest  of 
the  improvident  slave  himself,"   insuring  him  kind  care- 


6  ECONOMIC  AMD   /JVDU STASIA L    DELUSION <i. 

takers.  It  was  *'  more  productive  than  free  labor  "  would 
be  in  the  same  regions.  It  involved  vested  interests, 
whose  ruin  "would  bring  about  that  of  many  others — if 
not  indeed  the  entire  community."  And  then  it  was 
American,  the  pet  "peculiar  institution"  of  its  section, 
and  all  the  more  meritorious  because  England  detested 
it.  These  reasons  were,  of  course,  liberally  reinforced  by 
denunciations  of  the  partisans  of  freedom,  limited  in 
compass  and  untempered  violence  only  by  the  imagina- 
tion of  the  denouncers  ;  and  as  a  clincher  or  capstone, 
every  one  who  ventured  a  word  in  the  cause  of  liberty, 
humanity,  and  true  economy,  saw  himself  confronted 
with  the  Socratic  question,  "  Do  you  want  your  daughter 
to  marry  a  nigger?" 

What  has  happened  so  often  may  happen  again — is 
happening  now.  Our  country  is  this  day  dominated  by 
an  abuse  which  owes  its  continuance  altogether  to  the 
money  which  it  enables  the  few  to  filch  from  the  many, 
and  the  sophisms  which  the  expenditure  of  a  part  of  that 
money  procures  to  be  worked  up  into  plausible  shape, 
and  passed  off  as  words  of  wisdom.  The  arguments 
brought  forward  to  support  the  system  of  protection  run 
precisely  parallel  with  those  that  have  been  used  to  sell 
patent  medicines  elsewhere,  or  bolster  up  aristocratic 
pretensions  in  the  Old  World,  or  serve  the  interest  of 
American  slavery ;  even  down  to  the  Socratic  question, 
which  demands  but  the  small  change  into  "  Do  you  Avant 
to  work  for  European  wages  ?  "  or,  "  Do  you  want  to  give 
England  all  our  manufactures?"  to  make  the  parallel  a 
practical  identity.  But  the  difference  yet  outlying  is  so 
important,  between  an  abuse  which  still  controls  us  and 
one  we  have  so  thoroughly  overcome  that  even  its  former 
advocates  rejoice  in  our  deliverance  from  it,  that  it  has 
seemed  worth  while  to  review  the  case  for  protection  in 


THE    CASE    FOR   PROTECTION  EXAMINED.  7 

some  detail.  It  will  be  impracticable  to  track  the  serpent 
through  all  the  mazes  Avherein  he  "  wriggles  in  and 
wriggles  out,"  but  it  will  answer  almost  as  well  to  give 
several  instances,  under  different  heads,  of  the  kind  of 
reasoning  that  must  be  met. 

Such  a  discussion  is  still  timely.  It  was  very  proper  to 
strike  our  heaviest  blows  where  and  when  our  enemy 
raised  his  head  most  insolently,  and  they  were  so  struck 
when  we  last  appealed  to  the  people.  The  result  of  that 
appeal  has  amply  justified  in  their  confidence  those  who 
declined  to  believe  that  political  economy  was  any  more 
effectually  killed  by  the  barter  and  traffic  which  decided 
the  presidential  election,  than  was  astronomy  by  the  fires 
of  the  inquisition,  or  liberty  by  the  Dred  Scott  decision. 
But  the  position  which  has  been  occupied  has  now  to  be 
held.  The  strongholds  just  won,  in  country  which  the 
defeated  but  yet  unsubdued  foe  has  most  confidently 
claimed  for  himself,  have  now  to  be  manned  and  pro- 
visioned against  the  desperate  assault  he  is  preparing 
for  their  recapture.  Revenue  reform  through  the  recent 
congressional  elections,  emphatic  though  they  were,  and 
of  a  significance  too  deep  to  be  decried,  has  only  gained 
fair  fighting  ground.  Its  battle  is  yet  before  it ;  and  it 
requires  of  every  champion,  the  weakest  along  with  the 
strongest,  his  utmost  efforts  to  make  its  final  victory  as 
speedy  and  complete  as  possible. 

THE    CASE    ANALYZED. 

For  many  years  political  economy  has  been  the  favorite 
study  of  my  scanty  leisure  hours.  In  this  study  I  have 
given  constant  attention  to  the  protective  side.  I  owe 
less  for  the  presentation  of  that  side  in  my  mind  to  the 
caricatures  of  the  subject  in  the  so-called  "  Political 
Economies "   and   "  Economic    Philosophies "    of    Carey, 


8  ECONOMIC  AND   INDUSTIUAL   DELUSIONS. 

Greeley,  Thompson,  and  Denslow — though  those  works 
have  been  by  no  means  neglected — than  to  a  daily  read- 
ing of  the  Nezv  York  Tribune.  The  Tribune  was  in  my 
younger  days  "  the  leading  American  newspaper."  It  was 
the  first  I  ever  took  pleasure  in  reading,  and  I  long  valued 
it  as  the  most  vigorous  and  efficient  defender  of  the 
causes  I  had  nearest  at  heart :  freedom,  equal  rights,  the 
national  Union,  the  national  credit.  I  still  retain  the 
habit  of  reading  it  which  I  then  formed,  wide  as  is  the 
divergence  between  the  doctrines  it  now  espouses  and 
those  that  used  to  delight  me  in  it.  Of  a  body  of  teach- 
ing which  is  not  destined  to  any  lasting  continuance, 
which  lives  only  in  the  present,  the  newspaper  leading- 
article  is  the  fitting  expositor ;  and  an  extended  course 
of  Tribune  editorials,  with  due  attention  to  the  speeches 
and  magazine-writings  commended  therein,  has  given  me, 
I  believe,  a  very  fair  presentation  of  the  protectionist 
case.  This,  when  considered  according  to  method,  ap- 
pears to  be  made  up  of  five  parts,  as  follows : 

Conclusions  insufficiently  supported — and  overthrown 
by  presentation  of  sufficient  data, 

Empty  pretences — often  degenerating  into  plain  lying, 

Quibbles  and  juggles, 

Appeals  to  short-sighted  selfishness, 

Appeals  to  blind  sentiment. 

The  logical  difference  between  the  first  and  second  of 
these  heads  is  quite  pronounced,  but  it  is  difficult  to  dis- 
tinguish between  them  practically,  either  in  their  nature 
or  in  their  effect.  A  pretence  will  receive  no  attention 
unless  there  is  some  circumstance  to  give  it  plausibility ; 
in  which  case,  however  uncandidly  it  was  made,  it  passes 
as  a  conclusion  from  that  circumstance  as  a  premise.  The 
same  statement,  indeed,  may  be  the  hasty  conclusion  of 
some  minds  and  the  empty  pretence   of    others.      It  is, 


THE   CASE    FOR   PROTECTION  EXAMINED.  g 

therefore,  impossible  to  treat  the  two  separately,  as  it  was 
originally  my  desire  to  treat  the  many  instances  I  had 
collected  under  each  of  my  five  heads. 

There  seems  to  be  no  advantage  in  giving  any  extended 
separate  treatment  to  instances  under  the  third  head.  I 
shall  only  adduce  a  few  capable  of  amusing  the  reader  in 
connection  with  his  more  serious  study  of  the  subject  in 
the  chapters  to  follow. 

QUIBBLES    AND    JUGGLES    ILLUSTRATED. 

The  "  shipping-bounty  "  device.  Foreign  commerce  is 
treated  as  nothing  but  evil,  when  all  our  citizens  are  going 
to  get  advantage  in  purchasing  their  supplies  by  it.  The 
same  thing  is  treated  as  a  great  blessing  when  a  few 
favored  citizens  are  going  to  get  subsidies,  at  the  cost  of 
the  rest,  out  of  it  (see  Chapter  V.). 

Another,  with  the  same  purpose.  Great  Britain  pays 
out  to  about  one  twentieth  of  her  merchant  vessels,  for 
transportation  of  mails  and  construction-indemnity  to 
possible  war-ships,  liberal  sums— which  may  be  considered, 
so  far  as  they  are  in  excess  of  due  compensation,  as  subsi- 
dies. This  is  taken  as  proof  that  her  whole  mercantile 
marine  is  the  creation  of  subsidies. 

The  "  laboring-man  "  dodge.  Goods  are  no  cheaper 
abroad,  it  appears,  when  the  poor  fellow  complains  of  the 
price  of  what  he  has  to  buy.  But,  it  appears  in  almost  the 
same  breath,  the  reason  why  they  are  cheaper  abroad  is 
that  the  difference  is  given  here  as  higher  wages  to  the 
working  man  (Chapter  VI.). 

Another,  in  the  same  connection.  High  duties  are  the 
cause  of  high  wages,  their  advocates  always  tell  us.  But 
those  very  duties,  say  these  same  advocates,  are  made 
necessary  by  our  high  wages — being  thus  cause  and  effect 
at  the  same  time. 


lO  ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

Yet  another.  The  fact  that  the  purchase  of  an  article 
of  foreign  make  renders  it  impossible  for  home  artisans  to 
make  that  article  for  us,  is  loudly  and  widely  proclaimed. 
The  inseparable  corresponding  fact  that  that  very  purchase 
calls  for  additional  home  labor,  in  the  production  of  the 
article  that  has  to  be  paid  in  exchange,  is  suppressed.  In 
other  words :  in  order  to  get  anything  he  needs,  a  man 
must  work,  beg,  or  steal.  But  when  many  men  associate 
themselves  under  a  government,  it  is  intimated  that  they 
can  contrive  to  get  things  in  some  other  way. 

The  "  duty-is-paid-by-the-foreign-producer  "  trick.  The 
import  tax  is  vaunted  by  some  statesmen,  as  a  license 
paid  by  a  foreigner  for  access  to  our  market — thus  not 
being  added  to  the  price  of  the  goods.  But  were  the  tax 
taken  off,  the  same  statesmen  warn  us,  it  would  bring 
down  on  us  a  "  flood  of  cheaper  goods  " — just  because  at 
present  it  is  added  to  the  price  (Chapters  VI.,  IX.). 

Another  form  of  the  same.  Some  English  dealers  make 
objections  to  our  high  duties,  thus  proving  that  they  lose 
thereby.  It  is  then  taken  for  granted  that  whatever  they 
lose  is  clear  gain  to  our  citizens,  and  that  the  question  of 
loss  or  gain  among  our  own  citizens  is  no  concern  of  the 
government.  This  trick,  as  I  calculate,  is  about  all  there 
is  to  Hon.  Wm.  McKinley  as  a  reasoner.  Deprive  him  of 
it,  and  he  vanishes  like  a  pricked  bubble. 

The  "  home  market  "  quibble.  It  is  proved  that  the 
producer  is  favored,  other  things  being  equal,  by  having  a 
market  to  which  transportation  is  cheap.  The  proof  is 
used  as  though  it  applied  to  something  essentially  differ- 
ent :  a  market  under  jurisdiction  of  our  government 
(Chapter  VII.). 

Another  pitfall  for  the  farmer.  High  duties  on  his  own 
products  are  commended  to  him,  because  it  is  the  effect 
of   duties    to    increase    the    price.       High  duties  on  the 


THE    CASK   FOR   PROTECTION  EXAMINED.  H 

products  he  buys,  in  the  same  commendation,  because 
it  is  the  effect  of  duties  to  lower  the  price  by  exciting 
competition. 

Such  instances,  as  clearly  appears  in  more  than  one  of 
the  specimens  given,  are  not  readily  separable  from  those 
under  my  first  head.  The  use  of  a  proof  as  if  it  were  a 
proof  of  something  else,  may  be  quite  appropriately 
treated  as  an  assumption  of  that  something  else  as  a  con- 
clusion insufficiently  supported  ;  and  the  contradictions 
in  statement  of  fact  or  principle  may  be  treated  as  assump- 
tions quite  unsupported.  The  distinction  between  juggle 
and  pretence  is  certainly  narrow. 

EMOTIONAL     APPEALS. 

The  selfishness  to  which  the  protectionists  appeal  is 
appropriately  distinguished  as  "  short-sighted  "  ;  political 
economy  knows  no  tribunal  higher  than  far-sighted  self- 
ishness. Appeals  of  this  kind  contain  some  measure  of 
argument,  and  some  of  an  emotional  element ;  in  criti- 
cising them,  however,  since  one  cannot  reason  with  pure 
prejudice,  one  has  to  confine  himself  to  the  argumentative 
part — there  seems  to  be  no  better  treatment  for  them, 
therefore,  than  as  conclusions  without  sufficient  data. 
Instances  coming  under  this  head  run  parallel  with  the 
preceding,  and  we  can  show  whether  an  appeal  is  of  the 
short-sighted  or  of  the  far-sighted  order  only  by  testing 
the  sufficiency  of  the  reasoning  on  which  it  is  supported. 

The  same  thing,  in  a  general  way,  is  to  be  said  of  the 
last  group ;  as  may  be  shown  by  the  sentiments  to  which 
the  appeal  is  most  effectively  made.  The  sentiment  of 
distrust  against  "  Confederates "  is  successfully  set  to 
work  against  the  whole  planting  interest,  along  with  that 
of  all  agriculture  and  other  exporting  interests  generally. 
That    of   gratitude    to    the    Republican    party   for   great 


12  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

deeds  done  by  it  in  the  past,  is  used  to  enforce  implicit 
submission  to  the  party  now  bearing  that  name — to  justify 
it  and  to  disarm  criticism  when  it  does  deeds  of  an  entirely 
different  kind  in  the  present.  That  of  repulsion  toward 
the  British  tyranny  of  a  century  ago,  is  used  to  advance 
any  measure  that  has  the  appearance  of  vexing  our  island 
kindred  in  these  days.  There  are  other  instances  besides, 
where  an  empty  name  receives  the  homage  to  which  only 
an  idea  is  entitled.  May  not  all  these  be  classed  with 
conclusions  whose  support  is  inadequate — which  must 
essentially  change,  when  misleading  because  partial  data 
are  supplemented  and  corrected  by  the  data  in  their 
entirety?  Certainly  ;  diverse  as  is  the  nature  of  the  mul- 
titudinous elements  of  the  protectionist  case,  all  may  be 
treated  in  the  same  way,  when  indeed  they  call  for  any- 
thing further  than  exposure.  This  treatment  will  be 
insufificient,  doubtless,  for  two  classes  of  people :  those 
so  prejudiced  as  to  be  beyond  the  reach  of  reasoning,  and 
those  so  ignorant  as  to  be  unable  to  entertain  it  until 
prepared  by  the  needed  information.  But  those  two 
classes  are  far  from  including  all  our  opponents.  Some 
conclusions  of  considerable  plausibility,  yet  fatally  incom- 
plete in  some  part  of  their  support,  I  can  appreciate  the 
difficulty  in  satisfactorily  exposing  and  refuting ;  these 
are  too  often  able  to  mislead  minds  of  a  better  order. 

Most  of  the  blind  sentiments,  in  appealing  to  which  the 
protectionists  find  so  much  of  their  advantage,  are  forms 
of  perverted  party  loyalty.  From  the  tension  and  bitter- 
ness of  partisan  feeling.  Protection  gains  its  most  power- 
ful— I  feel  justified  in  saying,  its  only  powerful  support. 
The  strongest  position  deserves  and  invites  the  first 
attack. 


CHAPTER  II. 

ABUSE    OF    PARTY    ALLEGIANCE. 

Party  allegiance  has  nearly  the  same  relation  to  patri- 
otism, the  sense  of  a  country  including  all  parties,  that 
patriotism  has  to  philanthropy,  the  sense  of  a  human 
brotherhood  covering  all  countries.  It  is  usually  stronger, 
and  essentially  narrower.  It  is  a  sentiment  which  must 
have,  besides  its  object  of  affection,  an  object  of  repul- 
sion, a  resistance  to  be  overcome ;  and  it  needs  the  stimu- 
lus of  a  contest  to  bring  out  its  power.  Are  we  to  be 
persuaded  by  those  teachers  who  exalt  the  cause  of  party 
into  something  ineffably  sacred,  worthy  of  man's  unswerv- 
ing loyalty,  engrossing  devotion,  and  mightiest  efforts  ;  or 
by  those  who  seek  altogether  to  dispense  with  party,  who 
claim  that  states  can  be  better  governed  without  it,  and 
have  for  its  war-cries  and  enthusiasms  nothing  but  cold 
disapproval?  Neither  should  be  followed  always,  or 
rejected  always ;  and  at  times  there  is  truth  with  both. 
Party  loyalty  has  its  uses  and  at  the  same  time  its  abuses. 
It  may  sometimes  be  ranked  even  among  the  loftiest, 
most  ennobling  of  human  passions,  its  narrowness  being 
lost  in  its  fervid  intensity.  If  our  affections  are  estimable 
in  proportion  to  their  "  altruism  " — their  carrying  us  out 
of  ourselves — the  narrower  and  more  powerful  affection 
may  easily  transcend  the  broader  and  feebler.  Love  of 
one's  family  is  one  of  the  narrow  sentiments,  yet  little 
respect  is  felt  for  the  man  who  professes  a  warmer  affec- 

13 


14  F.CONOMIC  AND   INDUSTRIAL    DELUSIONS. 

tion  for  the  world-full   <>f  fcllow-men  outside  lliau  for  his 
own  family. 

MUTABILITY    OK    PARTY    ISSUES. 

About  party  in  general,  hardly  a  statement  has  ever 
been  made  that  is  not  sometimes  true,  hardly  a  statement 
that  is  not  often  untrue.  A  party  organization  may  yes- 
terday have  been  the  means  of  advancing  some  important 
reform  or  of  resisting  some  inveterate  abuse,  so  that  in 
then  giving  it  all  possible  strength,  we  were  using  the  only 
practical  means  of  securing  the  reform  or  of  overthrow- 
ing the  abuse, — by  standing  aloof  we  would  have  allied 
ourselves  with  the  abuse  or  "  thing  to  be  reformed  "  ;  to- 
day may  find  that  organization  intrenched  and  arrogant 
in  power,  using  the  same  battle-cries  which  then  won  it 
the  victory,  to  win  it  victory  in  some  very  different  con- 
test, eagerly  identifying  the  opponents  of  its  present  aim 
with  the  opponents  of  yesterday's  reform,  relying  on  the 
resistance  it  once  made  to  an  abuse  by  which  others  prof- 
ited, to  draw  attention  from  the  new  abuse  by  which  it  is 
profiting  ;  the  same  organization  may  to-morrow  become 
again  valuable  or  even  indispensable  to  the  people  as  a 
bulwark  against  rash  or  unwise  measures  proposed  by 
others.  The  mere  horde  of  spoilsmen  who  dominated  a 
party  at  last  election  time,  may  have  given  place,  when 
the  people  come  again  to  judge  between  parties,  to  sincere, 
wise,  and  patriotic  leaders. 

To  accuse  the  intelligent,  public-spirited  citizen  of  hold- 
ing exactly  the  same  attitude  toward  parties  while  parties 
themselves  are  undergoing  the  changes  I  have  described, 
would  seem  almost  an  insult  ;  and  yet  it  is  part  of  the 
history  of  our  country  that  such  changes  have  taken 
place,  and  that  many  of  its  best  citizens  have  shown  no 
consciousness  of  the   fact.     One  presidential   election  is 


ABUSE    OF  PARTY  ALLEGIANCE.  1$ 

determined  by  the  attitude  of  the  opposing  sides  on  some 
clearly  marked,  important  question  of  policy  ;  when  the 
next  arrives  that  question  has  been  set  quite  at  rest,  and 
the  contestants  themselves  are  not  agreed  what  is  at  issue 
beyond  the  determining  whether  this  or  that  set  of  men 
shall  go  into  office.  Before  we  have  a  third  election  some 
new  point  has  come  up  for  decision  and  the  lists  are 
formed  on  some  other  field  ;  and  yet  to  thousands  of 
conscientious,  active  minds  each  contest  appears  to  turn 
on  exactly  the  same  principle,  and  a  perfect  consistency 
is  seen  in  voting  with  the  same  party  from  first  to  last. 
Instead  of  a  fleeting  phantasmagoria  of  questions,  for 
these  minds  there  has  never  been  but  one  political  ques- 
tion. Their  position  I  believe  to  \>t  a  wrong  one,  but 
from  its  nature  a  strong  one.  There  are  indeed  some 
persistent  threads  running  through  this  changing  pattern, 
and  the  constancies  may  easily  appear  more  significant 
than  the  mutations  to  many  candid  minds.  Among  those 
who  are  able  to  discover  one  leading  motive,  one  domi- 
nant principle,  involved  in  every  political  question  which 
has  ever  come  before  the  United  States  for  settlement, 
even  where  it  was  totally  invisible  to  the  actors  them- 
selves,— who  are  able  to  see  their  own  party  constantly 
guided  by  that  motive,  on  guard  over  that  principle,  even 
where  nobody  appeared  conscious  of  it, — there  are  many 
who  have  more  closely  studied  and  more  thoroughly  in- 
formed themselves  upon  our  country's  history  than  has 
been  possible  to  me,  and  their  sincerity  is  above  suspicion. 
But  in  their  arguments  I  can  only  see  instances  of  misdi- 
rected ingenuity,  of  reading  into  history  a  meaning  that 
it  does  not  contain,  of  something  that  '^  admits  no  refuta- 
tion and  produces  no  conviction." 

The  great  underlying  constitutional  question,  whether 
our  organic  law  shall  in  doubtful  cases  be  construed  as 


1 6  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

reserving  a  power  to  the  States  or  as  committing  it  to  the 
general  government,  has  been  of  high  importance  in  our 
past  history,  and  is  destined  to  come  up  again  and  again, 
in  one  form  or  another.  But  the  attention  I  have  been 
able  to  give  to  the  political  conflicts  that  have  raged  in 
this  country,  has  not  shown  that  even  so  fundamental  a 
question  as  this  was  present  in  every  one  of  those  con- 
flicts. The  vision  always  on  the  lookout  for  "  strict  con- 
struction "  and  ''  liberal  construction  "  is  acute,  doubtless, 
but  I  trust  it  for  discernment  of  the  question's  importance, 
more  than  I  trust  it  for  power  to  find  that'  question 
wherever  sought. 

CAREER    OF    THE    REPUBLICAN    PARTY. 

The  Republican  party  of  our  generation  was  founded, 
as  is  well  understood,  on  a  liberal-construction  basis,  and 
cannot  be  said  to  have  become  a  champion  of  strict  con- 
struction at  any  time.  But  its  consistency  on  this  point 
is  accompanied  by  these  changes  :  its  original  extension 
of  the  sphere  of  governmental  activity  was  on  behalf  of 
liberty,  while  its  more  recent  projects  are  in  the  interest 
of  repression  ;  its  early  steps  toward  centralization  were 
forced  upon  it  by  the  necessity  of  maintaining  the  "  more 
perfect  Union  "  won  at  such  a  cost  by  our  fathers,  while 
its  later  steps  in  the  same  direction  appear  to  have  been 
dictated  very  largely  by  a  desire  to  saddle  on  the  public 
the  cost  of  repaying  certain  handsome  and  much-needed 
contributions  to  its  campaign  chest.  Such  a  consistency 
is  no  glory  to  the  party,  for  there  can  be  no  dispute  that 
the  merit  of  liberal  construction  depends  altogether  on 
the  end  to  which  it  is  applied.  There  is  nothing  of  prin- 
ciple in  it,  save  as  it  is  associated  and  allied  with  principle. 
It  furnishes,  therefore,  no  good  reason  why  those  once  in 
the  Republican  party  should  forever  remain  so. 


ABUSE    OF  PARTY  ALLEGIANCE.  1/ 

By  the  best  approved  definition  of  a  political  party,  "  a 
body  of  men  associated  for  the  promotion  of  the  public 
good  by  some  common  principle  on  which  all  are  agreed," 
the  principle  upheld  by  a  party  is  made  the  vitally  impor- 
tant point ;  and  so  I  have  always  considered  it.  To  many 
of  my  fellow-citizens,  the  party  name,  the  political 
machine,  and  the  set  of  men  who  keep  it  running,  seem 
to  be  points  of  far  higher  importance.  Otherwise,  their 
accusations  of  disloyalty  and  desertion,  against  those  who 
formerly  co-operated  with  them  as  Republicans,  and  are 
now  unyieldingly  opposed  to  what  calls  itself  Republican- 
ism, are  without  force.  Very  little  force  belongs  to  such 
accusations  at  best,  with  men  who  have  never  considered 
name  and  machine  and  leaders  as  more  than  mere  acces- 
sories, of  account  only  as  means  to  an  end.  When  an 
appeal  in  behalf  of  the  Republicanism  of  this  day  is  based, 
as  it  usually  is,  on  the  character  and  exploits  of  the 
organization  in  other  days,  I  am  reminded  of  a  certain 
stage-driver.  A  traveller,  it  seems,  once  found  himself  at 
a  rural  post-office  where  were  two  stage-coaches  headed 
in  opposite  directions.  One  of  the  drivers  thus  hailed 
him  :  "  You  will  go  with  me,  I  know.  You  travelled 
with  me  a  year  ago,  and  you  see  how  much  stouter 
my  horses  are  and  how  much  more  elegantly  my 
stage  is  fitted  up."  To  the  traveller's  reply  that  he  was 
not  headed  the  right  way,  the  driver  returned  the  crush- 
ing rejoinder  :  "  I  took  you  just  where  you  wanted  to  be 
taken,  a  year  ago !  "  It  is  quite  probable,  that  if  the 
traveller  cared  more  how  than  whither  he  was  carried,  or 
more  which  stage  had  gone  the  right  way  the  year  before 
than  which  was  going  the  right  way  now,  he  suffered  him- 
self to  be  persuaded  by  the  zealous  coachman  ;  and  for 
all  who  take  up  public  questions  in  a  similar  spirit,  these 
Republican  arguments  will  doubtless  be  of  telling  force. 


1 8  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

If  Burke  was  right  in  the  definition  I  have  quoted  from 
him,  it  seems  to  follow  that  complete  success  may  be  as 
destructive  as  complete  failure  to  the  life  of  a  political 
party.  No  party  in  this  country,  not  even  excepting  the 
first  Republican  led  by  Jefferson,  has  ever  been  crowned 
with  more  brilliant  success  than  the  later  Republican 
party,  formed  in  1854  to  resist  the  further  spread  of 
slavery.  Although  it  was  badly  defeated  in  its  first 
presidential  contest  ;  although  the  advent  of  the  adminis- 
tration which  had  triumphed  over  it  was  further  signalized 
by  the  decision  of  the  famous  Dred  Scott  case  in  an 
elaborately  prepared  opinion,  whose  design  and  effect 
were  to  solidify  and  strengthen  the  slave  power ;  although 
the  prevailing  animus  against  it  had  lost  nothing  in  inten- 
sity or  bitterness  ;  yet  the  country  very  soon  saw  that  its 
mission  was  destined  to  success,  and  that  slavery  had  al- 
ready reached  its  furthest  limit.  The  party  soon  won  the 
Presidency,  o'nly  to  find  thrown  on  it  the  fearful  task  of 
holding  the  Union  together  by  war.  Absurd  as  is  the 
claim  that  the  Union  was  saved  by  Republicans  only,  and 
well  known  as  is  the  fact  that  but  for  Lincoln's  sagacity 
in  summoning  to  important  positions  in  his  council,  and 
sending  to  important  stations  in  the  field,  leading  men  of 
the  party  that  had  opposed  him,  the  task  would  have 
proved  too  great  for  his  strength  ;  notwithstanding  this 
it  may  yet  be  allowed  that,  since  the  war  was  conducted 
under  a  Republican  administration,  that  party  has  a  right 
to  include  the  final  victory  among  the  successes  of  its 
policy.  Growing  out  of  the  war,  the  first  contest  the 
victors  found  on  their  hands,  was  over  giving  the  freed- 
man  a  civil  status,  in  which  he  could  maintain  his  newly- 
acknowledged  rights,  and  the  second  was  over  establishing 
the  national  credit,  which  had  been  pledged  for  the  na- 
tion's preservation  ;  in  both  of  these  it  Avas  again  success- 


ABUSE    OF  PARTY  ALLEGIANCE.  IQ 

ful.  These  great  questions  were  not  set  entirely  at  rest 
until  1880;  as  late  as  that  year  a  Republican  victory 
appeared,  to  maqy  cool  business  men,  necessary  for  the 
maintenance  of  specie  resumption. 

By  electing  Garfield  and  Arthur,  with  a  Congress  favor- 
able to  their  policy,  the  Republican  party  could  fairly  be 
looked  on  as  having  finished  its  work,  and  as  ready  to  be 
dissolved.  Many  who  had  given  it  faithful  allegiance 
believed  its  mission  ended  as  soon  as  the  life  of  the 
Union  and  the  death  of  slavery  were  assured  ;  and  many 
more  after  those  results  had  been  confirmed  by  the  rati- 
fication and  acceptance  of  the  three  Constitutional 
Amendments.  These  had  entered  the  party  as  into  a 
limited  partnership,  and  reserved  the  privilege  of  with- 
drawing their  stock  when  the  business  for  which  they  had 
gone  into  it  was  done.  With  the  rest  of  us,  at  those 
times,  it  was  a  case  of  reorganization.  Our  first  co-part- 
nership had  terminated,  but  the  opposition  concern  was 
able  to  hold  out  no  more  satisfactory  inducements.  The 
case  became  different  after  the  battle  over  specie  resump- 
tion had  been  fought  and  won,  and  the  notes  of  the 
Treasury  were  brought  fully  to  par  in  our  own  country 
and  abroad. 

WHY    THE    PARTY    BECAME    A    CHAMPION    OF    THE    TARIFF. 

Besides  the  campaign-expense  obligations  already  men- 
tioned, two  motives  seem  to  have  been  active  in  determin- 
ing the  Republican  party  to  undertake  the  ofifice  of 
maintaining  public  taxation  for  private  gain,  in  the  con- 
test over  that  policy  to  which  the  high  war  duties  were 
certain  sooner  or  later  to  lead.  One  of  these  grew  out  of 
its  altogether  honorable  connection  with  the  public  debt, 
as  the  upholder  of  which  it  was  obliged  to  take  a  position 


20  ECONOMIC  AND   INDUSTRIAL   DFJMSIONS. 

favorable  to  large  revenues  and  ample  taxation.  Of 
course  it  was  one  thing  to  advocate  taxes  for  meeting  the 
government's  indebtedness,  and  quite  another  to  advo- 
cate them  for  the  incidental  gain  they  brought  individ- 
uals— the  former  need  by  no  means  necessarily  have 
led  to  the  latter,  yet  it  very  easily  did  so.  The  other 
motive  arose  from  a  connection  equally  honorable  to  it, 
equally  perverted.  The  victory  in  our  civil  conflict  had 
been  distinctively  that  of  an  industrial  civilization  over  a 
feudal  or  patriarchal  one ;  the  great  industrial  enterprises 
were  all  on  the  side  under  whose  leadership  tlie  victory 
had  been  won  ;  and  naturally  when  their  influence  came 
to  be  active  in  their  own  behalf,  it  was  the  party  to  which 
they  had  already  attached  themselves  that  most  felt  it. 
Of  course  it  was  one  thing  to  champion  the  cause  of 
mechanical  industries  as  desirable  in  themselves  and  hon- 
orable to  those  engaged  in  them,  and  quite  another  to 
encourage  them  to  become  parasitic  on  their  fellows, 
drawing  part  of  their  profit  from  licensed  plunder  of 
industries  equally  desirable  and  honorable  ;  but  it  was 
very  easy  for  events  to  take  the  course  they  did.  It  was 
perhaps  equally  easy  for  the  great  pecuniary  interests 
that  had  succeeded  in  swinging  the  party  around  into 
this  course,  along  with  the  leaders  whom  they  had  already 
persuaded,  to  join  in  calling  upon  every  one  who  had 
ever  borne  the  name  of  Republican  to  accept  the  strange 
doctrine  as  the  original  and  genuine  Republicanism.  I 
am  sorry  to  say  how  easy,  how  natural  it  proved  for  the 
great  majority  of  the  old  Republicans  to  submit  and  help 
to  convert  the  grand  party  of  freedom  into  a  party  of 
restriction.  All  was  easy  enough  to  do,  and  is  easy 
enough  to  explain,  but  it  did  not  in  the  least  have  to  be 
done — the  irresistible  force  of  logical  necessity  was  not 
behind  it. 


ABUSE   OF  PARTY  ALLEGIANCE.  21 

No  less  natural  is  it,  that  the  degeneration  from  a  Re- 
publicanism that  meant  earnestness  for  a  moral  cause — 
for  what  was  believed  and  proved  itself  "  a  higher  law 
than  the  Constitution  "  into  a  Republicanism  that  means 
advancement  of  personal  interests,  should  be  marked  by 
a  lower  tone  in  the  public  utterance  of  Republicans,  and 
a  parallel  degeneration  of  their  moral  fibre.  True,  echoes 
of  the  same  voice  are  left,  in  the  old  oracles  of  the  party 
— from  which  the  heedless  hearer  might  believe  that  the 
same  ardor  for  humanity  that  once  fired  it  was  there  un- 
extinguished ;  but  their  ring,  to  any  one  who  intently 
listens,  is  hollow  enough.  We  are  often  told,  in  full- 
mouthed  sentences,  that  the  old  zeal  for  the  laborer 
which  first  actuated  them  in  setting  rigid  bounds  to  the 
institution  which  degraded  labor,  and  afterwards,  in  strik- 
ing the  shackles  from  his  limbs,  actuates  them  unchanged 
in  their  alleged  defence  of  him  against  foreign  compe- 
tition ;  but  the  pretence  has  been  fully  exposed,  and  its 
dupes  are  growing  ever  fewer. 

REPUBLICAN  PLATFORM  OF  1888. 

Most  striking  among  the  evidences  that  can  be  brought 
to  show  moral  degeneracy  in  this  great  party  is  the  lead- 
ing "  plank  "  in  its  last  National  Platform.  A  theme  had 
been  provided  by  the  President  in  his  December  message  ; 
the  prominent  issue  of  that  campaign  was  well  understood 
to  be  tariff  revision  ;  and  the  preparation  of  the  party 
declaration  upon  it  was  intrusted  to  a  distinguished  Con- 
gressman who  had  long  made  that  theme  a  specialty.  I 
remember  that  Tariff  Plank  as  the  crossing  of  the  Rubicon 
— the  fatal  step  which  rendered  finally  impossible  for  me 
any  further  co-operation  with  the  party  of  my  early  choice 
and  affection ;  for  I  could  find  in  it  little  else  than  reckless 


22  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

falsehood.  On  examining  the  nine  sentences  that  form  it 
I  detected  in  every  sentence,  with  one  exception  or  pos- 
sibly two,  at  least  one  falsehood — one  statement  made  or 
necessarily  implied,  whose  untruth  was  susceptible  of  easy 
and  irrefragable  proof.  Since  the  matter  has  for  us  a 
more  than  temporary  interest,  since  the  continued  activity 
of  the  party  which  consented  deliberately  to  adopt  as  its 
own  that  disgraceful  platform  is  still  one  of  the  ugly  facts 
of  our  political  life,  I  will  give  my  examination  in  detail : 
only  indicating  most  of  my  proofs,  which  will  be  found 
more  fully  made  out  in  later  chapters. 

"  We  are  uncompromisingly  in  favor  of  the  American 
system  of  Protection  ;  we  protest  against  its  destruction, 
as  proposed  by  the  President  and  his  party."  (i)  The  first 
clause  necessarily  implies  the  existence  of  some  "  American 
system  of  Protection,"  whereas  no  such  thing  either  ex- 
ists or  ever  has  existed.  The  system  which  our  country 
has  hung  about  its  neck  is  a  copy  of  that  which  Spain  has 
long  found  congenial,  and  which  is  the  natural  resource  of 
half-civilized  countries.  It  is  nothing  whatever  but  the 
system  followed  by  the  British  before  they  learned  better. 
I  am  well  aware  that  when  this  servile  imitation  of  Old- 
World  paternalism  was  first  recommended  among  us,  it 
sought  a  factitious  popularity  by  assuming  the  name 
"  American,"  but  that  demagogue's  trick  was  skilfully 
and  easily  exposed  by  Webster,  whose  altogether  just 
observation  that  the  system  which  the  phrase-mongers 
would  call  "  foreign  "  was  one  which  the  United  States 
had  followed  from  the  first  formation  of  their  Union, 
while  that  vaunted  as  "  American "  was  one  directly 
transplanted  from  Europe,  has  only  to  be  remembered  to 
stamp  every  pretence  of  an  "  American  system  of  Pro- 
tection "  as  shallow  ignorance  or  mendacity.  (2)  It  is 
untrue  that  "  the  President  and  his  party  "  proposed  to 


ABUSE    OF  PARTY   ALLEGIANCE.  23 

destroy  protection.  Possibly  they  ought  to  have  done  so, 
but  they  never  did.  What  they  proposed  was,  by  the 
correction  of  certain  of  its  grosser  abuses,  to  let  in  a  little 
daylight  upon  its  real  character.  If  it  was  indeed  the 
opinion  of  the  platform-makers  that  the  system  could  not 
bear  daylight,  and  that  the  people  could  not  be  trusted  to 
see  the  effect  of  taking  off  a  few  duties  for  fear  of  the 
blind  rush  that  would  at  once  be  made  to  strike  down  the 
rest,  they  were  not  without  grounds  for  that  opinion ;  but 
even  that  could  not  justify  misrepresentation  of  what 
their  opponents  proposed. 

"  They  serve  the  interests  of  Europe  :  we  will  support 
the  interests  of  America."  Here  is  a  plain  implication 
that  the  "  interests  of  America  "  are  not  better  off  with- 
out such  "  support "  than  with  it,  which  is  of  course  false. 
Let  us  consider  how  we  must  reason  to  reach  such  a  con- 
clusion. It  is  granted  that  the  Democratic  policy  is  to 
reduce  import  taxation.  Granted  also  that  that  policy 
would  increase  our  commerce  with  Europe.  Now,  in 
order  that  a  commercial  transaction  between  this  country 
and  Europe  may  "  serve  the  interests  of  Europe,"  and 
leave  our  own  in  need  of  "  support,"  Europe  must  gain 
something  and  we  nothing  by  it.  If  that  were  true  it 
would  prove  Europe  more  sagacious  and  better  at  a 
bargain  than  we.     But  it  is  not  true. 

"  We  accept  the  issue,  and  confidently  appeal  to  the 
people  for  their  judgment."  This  claim  might  have  been 
difficult  to  refute  at  the  time  it  was  made,  but  the  conduct 
of  their  campaign  and  the  result  of  the  last  congressional 
elections  have  effectually  exposed  it.  The  evidence  that 
it  was  to  something  entirely  different  that  the  Republican 
managers  "  confidently  appealed,"  consists  of  more  than 
mere  surmises.  Testimony  as  to  gross  bribery  in  Indiana 
— unhappily  implicating  both  sides,  but  more  deeply  the 


24  ECONOMIC  AND   INDUSTRIAL  DELUSIONS. 

one  that  was  able  to  enter  the  contest  with  more  money — 
is  not  entirely  comprised  in  the  letter  believed  to  have 
been  written  by  the  treasurer  of  the  National  Campaign 
Committee,  counselling  that  "  floaters  "  be  looked  after  to 
see  that  none  get  away,  '  in  blocks  of  five,  with  a  reliable 
man  in  charge  of  each  block  ";  nor  does  our  conclusion 
that  the  Republican  plurality  obtained  in  New  York  came 
from  other  appeals  than  to  the  people's  judgment  depend 
altogether  on  the  huge  sum  handed  over  to  their  astute 
Committee  Chairman,  toward  the  end  of  the  campaign,  by 
that  Pennsylvania  business  man  whom  a  surprised  country 
was  so  soon  to  see  hoisted  into  high  government  position. 
We  remember  the  situation  in  that  State.  The  Demo- 
cratic candidate  for  Governor,  a  declared  ally  of  the 
liquor  interest,  with  a  limited  but  determined  opposition 
in  his  own  party ;  the  Republican  candidate  its  declared 
enemy,  and  his  canvass  especially  calculated  to  alarm  it ; 
the  politicians  in  both  camps  approved  adepts  in  bargain 
and  intrigue.  The  result  showed  a  falling  off  in  the 
President's  vote,  compared  with  his  opponent,  from  the 
Governor's  vote  similarly  compared,  of  over  twenty  thou- 
sand in  New  York  and  Erie  counties  alone — those  being 
the  two  in  which  the  saloons  were  most  numerous  and 
powerful.  As  these  two  counties,  casting  together  hardly 
over  one  fourth  of  the  State's  vote,  showed  more  than 
sixty  per  cent,  of  the  whole  defection,  so  that  an  inter- 
change of  their  presidential  and  gubernatorial  figures 
would  have  reversed  both  results,  we  need  go  no  further 
— these  facts  are  enough  to  assure  us  that  the  Republicans 
won  New  York  State  and  the  whole  election  by  dickering 
with  the  liquor  men.'      But   this   is   not   all.     If  we   are 

'"But  in  that  contest,  as  people  here  well  know,  Hill  succeeded  only 
because  he  was  able  to  sell  a  Presidency  for  a  Governorship." — N.  Y.  Tri~ 
(JM«f  .(editorial),  Feb.  14,  1890. 


ABUSE    OF  PARTY  ALLEGIANCE.  25 

to  accept  the  confessions  wrung  by  recent  disaster  from 
those  who  bore  the  brunt  of  the  battle  for  the  RepubH- 
cans  in  the  great  Northwest,  they  had  no  such  legislation 
as  the  McKinley  Act  in  view  when  they  made  their  can- 
vass in  1888;  that  is  to  say,  they  did  not  "accept  the 
issue  "  as  declared  in  their  platform.'  I  think  I  may  be 
permitted,  as  a  statement  what  kind  of  an  "■  appeal  to  the 
people  for  their  judgment  "  was  actually  made,  to  repeat 
from  a  letter  of  my  own,  published  in  the  Philadelphia 
Record  about  the  ist  of  May,  1890:  "The  storj^  of  the 
purchase  of  Indiana  by  money,  sent  out  in  the  last  week 
of  the  struggle,  as  well  as  that  of  the  trading  in  New  York 
State,  has  often  been  told — so  often,  indeed,  that  we  are 
in  danger  of  forgetting  the  more  important  dif^culty  that 
we  had  then  to  contend  with.  The  few  thousand  votes 
within  reach  of  the  corruptionist  could  never  have  won 
the  day  for  him  had  it  not  been  for  the  many  thousands 
to  which  they  were  added — of  votes  that  did  not  have  to 
be  bought,  because  already  secured  by  successful  menda- 
city. Organs  and  orators  lied  about  the  '  free  trade  '  that 
they  professed  to  find  in  Cleveland's  message  and  the 
Mills  bill  ;  they  lied  about  Cleveland's  foreign  policy, 
particularly  in  regard  to  the  fisheries  treaty  ;  they  lied 
about  his  pension  vetoes,  so  that  to  this  very  day  no 
Republican  is  allowed  to  have  an  idea  of  the  real  charac- 
ter of  those  admirable  little  messages,  or  of  the  fact  shown 

'  "  Not  long  ago,  when  a  vigorous  speaker  had  set  forth  in  a  ceftain 
Western  city  the  reasons  for  Protection  he  was  told  by  an  intelligent  and 
experienced  leader  who  had  heard  him  :  '  That  is  the  first  genuine  Protec- 
tive speech  that  has  been  made  in  this  State  to  my  knowledge  for  thirty 
years.'  It  had  been  the  fashion  of  local  politicians  there  to  echo  in  every 
campaign  the  empty  and  meaningless  clamor  for  reduction  of  duties,  as  if 
that  were  of  necessity  reducing  the  burdens  of  the  people.  Straightforward 
advocacy  of  the  principles  of  Protection  had  been  almost  unknown  in  that 
quarter." — N.   Y.  Tribune  (editorial),  April  27,  1891. 


26  ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

by  them,  tliat  our  last  President  was  the  soldier's  wisest 
and  therefore  truest  friend  ;  they  lied  in  a  skulking,  secret 
way  about  his  private  life  ;  and  people  by  thousands  swal- 
lowed their  lies.  But  delusions  thus  spread,  though  handy 
enough  for  immediate  use,  are  certain  in  time  to  recoil 
upon  their  promulgators.  Those  who  have  been  cheated, 
as  soon  as  they  find  it  out  through  a  failure  of  things  to 
turn  out  as  predicted,  through  broken  promises  or  evi- 
dences of  a  debased  standard  of  conduct,  become  foes 
more  uncompromising  and  implacable  than  those  who 
never  yielded  credence.  Precisely  in  that  situation  are 
many  who  helped  to  make  up  the  Republican  majority  in 
1888."  Does  this  statement  appear  too  highly  colored  .' 
Greater  weight  may  be  allowed  it,  perhaps,  if  I  join  with 
it  the  first  three  sentences  from  the  same  letter  :  "  The 
signs  point  to  Democratic  gains  along  the  whole  line  in 
the  next  fall  elections.  The  revulsion  being  animated  by 
principle  must  be  permanent,  and  will  prove  more  decided 
than  those  of  1874  and  1882.  Our  own  State  is  joining  in 
the  movement,  and  will  give  those  who  have  not  been 
closely  watching  her  the  same  surprise  she  had  for  them 
eight  years  ago,  in  the  form  of  a  Democratic  Chief  Execu- 
tive." Those  sentences  need  hardly  have  been  different 
had  they  been  written  after  the  election.  Was  my  account 
of  events  yet  six  months  in  the  future  more  exact  than 
of  the  events  that  had  already  come  to  pass  ? 

"  The  protective  system  must  be  maintained."  This 
sentence  has,  I  hope,  no  more  truth  than  the  rest.  It  is, 
however,  the  exception  above  noted. 

''  Its  abandonment  has  always  been  followed  by  general 
disaster  to  all  interests,  except  those  of  the  usurer  and  the 
sheriff."  And  how  about  the  other  interests  that  oppose 
protection  ?  Must  we  then  believe  that  "  the  whiskey 
ring  and  the  agents  of  foreign  manufacturers  "  described 


ABUSE    OF  PARTY  ALLEGIANCE.  2/ 

as  working  with  that  object,  are  coolly  seeking  "  disaster  " 
for  themselves  ?  Must  we  believe  that  the  British  Isles 
contain  nobody  not  overwhelmed  by  disaster  except 
usurers  and  sheriffs  ?  But  why  continue  ?  he  who  would 
seriously  discuss  such  wretched  rubbish  is  almost  worthy 
to  rank  in  obtuseness  with  the  poor  dullards  it  is  designed 
to  captivate.  The  baleful  rattle  which  tells  of  the  venom- 
ous reptile  close  by,  is  no  warning  to  the  deaf  man  ;  and 
even  so  distinct  an  advertisement  as  this,  that  the  Repub- 
lican party  had  deliberately  committed  the  duty  of  pro- 
nouncing its  principles  to  lips  that  loved  a  lie,  fell  on 
many  deaf  ears  in  1888.  Deaf,  though,  for  the  time  only; 
the  pinch  that  has  come  with  the  law  giving  life  and  force 
to  the  professions  of  this  platform,  has  roused  to  acuteness 
many  sleep-locked  senses. 

"  We  denounce  the  Mills  bill  as  destructive  to  the  gen- 
eral business,  the  labor,  and  the  farming  interests  of  the 
country,  and  we  heartily  endorse  the  consistent  and 
patriotic  action  of  the  Republican  representatives  in 
opposing  its  passage."  So  recently  have  "  the  labor  and 
the  farming  interests  of  the  country  "  recorded  their 
verdict  on  a  bill  embodying  the  ripe  wisdom  of  these 
statesmen,  that  it  is  reasonable  to  believe  that  that  of 
Mills  would  be  by  this  time  quite  grateful  to  them.  A 
mighty  flood  of  failures  in  the  woollen  business,  unprece- 
dented save  in  time  of  panic,  followed — not  the  introduc- 
tion of  the  Mills  bill  or  its  passage  through  the  House, 
but — directly  upon  the  success  at  the  polls  of  the  party 
rejecting  it.  Needless  to  produce  proofs  more  at  length, 
as  that  is  the  business  of  the  chapters  to  follow. 

"  We  condemn  the  proposition  of  the  Democratic  party 
to  place  wool  on  the  free  list,  and  we  insist  that  the  duties 
thereon  shall  be  adjusted  and  maintained  so  as  to  furnish 
full  and  adequate  protection  to  that  industry  throughout 


28  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

the  United  States."  This  sentence  I  considered  doubtful, 
because  of  the  question  what  purpose  was  to  be  subserved 
by  "full  and  adequate  protection  to  that  industry."  The 
scale  of  duties  recommended,  it  is  fair  to  believe,  was 
what  afterwards  appeared  in  the  "  Senate  Bill  "  and  the 
"  McKinley  Rill " ;  something  after  the  fashion  of  the 
tariff  of  1867,  in  which  they  had  been  enormously  in- 
creased, with  the  effect  of  reducing  the  number  of  sheep 
in  the  seven  great  Northern  States,  New  York  and  Penn- 
sylvania west  to  the  Mississippi,  from  about  20  million,' 
two  thirds  of  the  number  in  the  whole  country  at  that 
date,  to  13  million  ten  years  later — it  has  never  since 
reached  15  million.  If  the  object  of  the  duties  was  to 
encourage  sheep-raising  in  these  great  agricultural  States, 
the  protection  sought  by  the  platform-makers  was  anything 
but  "full  and  adequate,"  and  we  have  here  a  falsehood  by 
implication.  If,  on  the  contrary,  what  they  desired  was 
simply  protection  "  full  and  adequate  "  to  insure  the  elec- 
toral vote  of  Ohio  for  their  party,  they  were  quite  right, 
as  far  as  one  election  can  decide.  They  have  not  secured 
it  for  1892,  however.  I  doubt  if  three  hundred  per  cent. 
on  every  fleece  could  do  that. 

"  The  Republican  party  would  effect  all  needed  reduc- 
tion of  the  national  revenue  by  repealing  the  taxes  on 
tobacco,  which  are  an  annoyance  and  burden  to  agricul- 
ture, and  the  taxes  on  spirits  used  in  the  arts  and  for 
mechanical  purposes,  and  by  such  revision  of  the  tariff 
laws  as  will  tend  to  check  imports  of  such  articles  as  are 
produced  by  our  people,  the  production  of  which  gives 
employment  to  our  labor  and  releases  from  import  duties 
those  articles  of  foreign  production  (except  luxuries)  the 
like   of    which    cannot    be    produced    at    home."       i.  To 

'  The  Agricultural  Department  reports  iiYt.  million,  but  it  seems  then  to 
have  included  lambs  with  sheep.    I  therefore  reduce  its  figures  by  one  fourth. 


ABUSE    OF  PARTY  ALLEGIANCE.  29 

identify  with  "agriculture"  the  interests  which  call  for 
cheaper  tobacco— a  drug  already  far  too  abundant  and 
too  freely  used — is  undoubtedly  a  misrepresentation  by 
implication.  The  tax  on  tobacco  makes  its  production 
less  profitable,  to  be  sure ;  but  how  much  of  "  agricul- 
ture "  is  occupied  with  this  production?  Of  the  total 
tilled  land  in  the  United  States,  by  the  census,  the  pro- 
portion planted  in  tobacco  is  about  one  350th  part.  The 
great  underlying  principle  of  protectionists,  to  prefer  the 
interest  of  a  very  small  fraction  to  that  of  the  whole, 
is  here  beautifully  shown  ;  for  the  fact,  that  a  little  "  bur- 
den "  upon  this  petty  handful  of  agriculturists  enables  the 
Treasury  to  dispense  with  some  of  the  taxation  that  would 
otherwise  bear  on  the  great  body,  they  overlook  or  inten- 
tionally suppress.  If  they  had  been  speaking  candidly, 
they  would  have  told  us  that  it  was  exactly  because  they 
did  not  wish  the  three  hundred  and  forty-nine  350ths  of 
"  agriculture "  to  be  relieved  of  its  "  annoyances  and 
burdens,"  that  they  laid  stress  upon  this  tobacco  excise. 
2.  Another  instance  is  seen  in  the  claim  that  certain  pro- 
duction "gives  employment  to  our  labor,"  when  it  does 
nothing  in  the  world  but  change  the  direction  of  that 
employment.  This  correction,  though  merely  verbal  in 
appearance,  is  yet  vitally  important.  It  is  untrue  that 
protection  "  gives  employment "  when  it  increases  the 
production  in  this  country  of  articles  we  would  otherwise 
import.  It  merely  diverts  that  employment  from  pro- 
duction of  the  articles  with  which  we  would  otherwise 
buy  them. 

"If  there  shall  remain  a  larger  revenue  than  is  requisite 
for  the  wants  of  the  government,  we  favor  the  entire 
repeal  of  the  internal-revenue  taxes,  rather  than  the  sur- 
i;"ender  of  any  part  of  our  protective  system,  at  the  joint 
behest    of    the    whiskey  ring  and  the  agents  of    foreign 


30  ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

manufacturers."  The  doctrine  here  implied,  that  cheaper 
whiskey  is  less  an  evil  than  cheaper  blankets  and  hardware, 
met  with  not  a  little  criticism  during  the  campaign,  and 
had  to  be  substantially  retracted  by  the  candidate  in  his 
letter  of  acceptance.  But  we  are  not  here  concerned  with 
the  doctrine,  unless  to  inquire  whether  or  not  the  plat- 
formers  sincerely  held  it ;  and  as  to  that  they  are  the 
proper  judges.  What  concerns  us  is  their  implication  that 
the  call  for  cheaper  blankets  and  hardware  is  issued  "  at 
the  behest  of  "  any  such  combination  as  they  name,  which 
is  a  phantasy  of  acute  delirium.  Of  course  "  the  whiskey 
ring  "  is  a  very  elastic  term,  and  might  be  applied  to  any- 
thing capable  of  encircling  whiskey  ;  but  applying  it  to 
the  "  interest  "  affected  by  the  whiskey  tax,  this  implica- 
tion is  seen  to  be  certainly  false  if  there  is  truth  in  the 
already  implied  embarrassment  to  the  tobacco  interest  of 
the  tax  on  that  commodity.  Something  was  said  during 
the  canvass,  we  may  remember,  before  the  abandonment 
of  this  declaration  relieved  the  Republican  party  of  a  ter- 
rific strain  on  its  inventive  powers,  about  one  or  many 
"  Whiskey  Trusts "  that  were  laboring  with  might  and 
main  to  keep  high  the  tax  on  their  own  goods — their 
evils,  more  properly  speaking — though  what  could  be 
their  object  in  a  policy  that  could  only  diminish  the 
demand  and  reduce  their  sales  and  their  profits,  not  a  hint 
was  dropped.  The  "  Whiskey  Trust  "  was  finally  resolved 
into  what  preferred  to  call  itself  a  "  Distillers'  and  Cattle- 
feeders*  Association  "  of  Peoria,  111.,  and  is  by  this  time 
reported — how  correctly  I  have  no  evidence  to  offer — as 
having  given  aid  on  the  Republican  side  in  the  presiden- 
tial struggle.     So  much  for  its  part  in  the  "behest." 

The  diflficulty  attending  such  an  examination  as  this, 
into  a  declaration  of  political  beliefs  and  aims,  is  that  all 
its  principal  statements  must  be  of  a  kind  not  open  to 


ABUSE    OF  PARTY  ALLEGIANCE.  31 

controversy — not  to  be  disproved  by  anything  short  of  a 
thorough  searching  of  innermost  minds  and  wills.  That 
in  spite  of  this  difficulty  so  many  demonstrable  false- 
hoods were  to  be  unearthed  from  the  plank  made  by  the 
Republicans  the  central  nucleus  of  their  last  address  to 
the  nation,  is  a  highly  significant  indication  of  the  present 
character  and  tendencies  of  their  party. 

WHO    ARE    THE    TRUE    REPUBLICANS? 

It  is  a  very  proper  question,  when  one  has  made  the 
comparison  between  the  Republicanism  of  our  day  and 
the  principles  which  first  gave  life  to  that  great  party,  and 
has  noted  the  disappearance  of  moral  force  from  it,  whe- 
ther that  moral  force  still  remains  to  guide  the  political 
life  of  the  country,  and  Avhere  it  is  to  be  found.  The  firm 
belief  of  those  who  have  separated  from  that  organization 
on  the  issues  of  paternalism,  privilege,  prescription  for 
purchasers  and  parasitic  industries,  is  that  the  true  spirit 
of  the  original  Republican  is  with  them.  In  support  of 
that  belief,  they  are  prepared  to  show  that  all  the  great 
causes  with  which  the  earlier  Republicans  were  identified 
are  safer  in  the  charge  of  those  who  oppose  the  later 
Republicans. 

First,  the  National  Union.  Formally,  the  Union  is 
perfectly  restored,  and  no  one  ventures  to  assail  it.  Prac- 
tically, however,  the  Union  is  assailed  whenever  any  sec- 
tion of  the  country  is  specially  picked  out  as  an  object  of 
distrust  and  obloquy,  and  when  attempts  are  made  to 
exclude  it  from  an  equitable  share  in  the  Government. 
It  is  well  known  that  the  plans  of  the  latter-day  Repub- 
licans involve  exactly  such  a  treatment  of  the  South,  and 
that  much  of  our  difficulty  in  displacing  them  is  due  to 
their  success  in  that  treatment.  The  section  which  became 
really  a  foe  to  the  Union  thirty  years  ago,  but  on  a  theory 


32  KCONORflC  AND   INDUSTRIAL   DRU'SIONS. 

of  the  Constitution  which  it  has  frankly  rchnquished  as 
impracticable,  and  in  defence  of  a  social  instituti(jn  which 
it  knows  to  be  dead  and  no  longer  laments,  is  still  accused 
— and  still  believed  to  be  guilty,  by  too  great  a  number 
of  our  citizens — of  a  pervading  ineradicable  disloyalty 
which  does  not  exist  in  it,  and  for  which  all  motive  has 
forever  disappeared.  It  is  known,  also,  that  no  section  of 
the  country  is  similarly  disparaged  on  the  other  side. 
True,  the  animus  against  the  Southern  States  is  resented 
in  those  States — sometimes  quite  passionately  ;  true,  the 
localization,  in  certain  States  of  the  Union,  of  the  great 
industrial  interests  which  have  so  powerfully  dominated 
our  legislation,  has  aroused  a  feeling  against  those  States 
among  the  sufTerers  from  lobby  legislation  in  other  sec- 
tions— sometimes  more  bitter  than  justice  or  prudence 
could  approve  ;  but  no  candid  man  would  think  of  saying 
that  sectional  hatred  is  used  in  aid  of  party  success,  among 
the  Democrats  in  our  day,  either  so  generally,  so  steadily 
or  so  strenuously  as  among  the  Republicans.  We  can 
conclude,  therefore,  that  the  Democrats  are  now  the 
trviest  friends  of  the  Union.  This  conclusion,  already 
reasonable  before  November  1890,  is  by  this  time  indubi- 
table. The  Democratic  majority  in  the  new  House  of 
Representatives  will  be  the  first  for  many  years  to  be 
completely  unsectional,  and  cannot  strike  at  any  part  of 
the  Union  without  risk  of  injuring  itself  more  than  the 
enemy. 

Next,  Freedom.  How  does  the  old  party  of  freedom 
stand  on  this  vital  issue  now?  Many  have  been  the 
attempts  to  disguise  its  attitude,  but  no  disguise  is  possi- 
ble. It  is  simply  undeniable  that,  under  protective  coun- 
sels, the  liberty  of  the  citizen  is  far  too  roughly  handled 
by  our  legislators.  However  exaggerated  the  opinion 
held  as  to  the  activity  of  the  foreign  producer  in  bringing 


ABUSE    OF  PARTY  ALLEGIANCE.  3 J 

his  wares  to  consumers  in  this  country,  it  has  never  been 
taught  that  he  exercised  any  compulsion  over  them,  or 
abridged  their  freedom  in  any  way  by  this  activity.  Give 
him  all  the  opportunity  possible ;  let  him  pile  his  cheap 
goods,  if  he  will,  right  under  the  nose  of  every  citizen  of 
this  broad  land,  and  the  solicited  citizens  have  full  power 
to  render  his  mighty  labor  of  no  avail,  by  simply  leaving 
him  alone ;  a  power  which  no  free-trader  has  ever  pro- 
posed in  any  wise  to  limit.  But  their  power  is  seriously 
limited,  and  their  liberty  invaded,  when  the  decision 
whether  or  not  to  leave  the  foreign  goods  alone  is  taken 
from  them,  through  arrest  of  importations  ;  when  they  are 
permitted  the  Hobson  choice  between  home-made  goods 
and  no  goods.  Since  in  all  production  it  is  the  demand 
of  the  consumer  that  is  primarily  considered,  the  interest 
of  the  producer  being  advanced  only  through  subordina- 
tion to  it,  the  buyer  is  properly  the  principal  and  the 
seller  only  an  accessory  in  every  purchase.  When  the 
transaction  is  prevented  or  punished,  the  principal  is  neces- 
sarily chief  sufferer.  Our  law  strikes  him  hardest  in  its 
effort  to  reach  the  accessory  ;  invariably  bears  heaviest  on 
our  own  citizens.  Is  it  any  defence,  that  this  assault  on 
the  liberty  of  the  citizen  does  not  reach  him  personally, 
directly  restrict  his  movements  or  despoil  him  of  goods? 
No  more  did  a  certain  impost  on  tea,  which  made  consid- 
erable talk  a  hundred  and  twenty  years  ago.  Perhaps 
our  forefathers  were  too  sensitive  about  this  impost,  see- 
ing that  they  were  graciously  allowed  the  same  kind  of 
freedom  that  the  protective  system  grants  us  in  these 
days,  to  take  taxed  tea  or  go  without.  Can  American 
freemen  hear  such  an  insinuation  with  easy  acquiescence? 
So  sedate  and  philosophic  a  writer  as  Herbert  Spencer 
has  well  said  that  the  government  which  arbitrarily  pre- 
scribes for  its  citizens  the  market   in  which  they  are  to 


34  ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

buy,  should  be  called  Aggressive  and  never  Protective. 
His  words  carry  us  back  to  the  attitude  held  by  those 
who  achieved  our  independence,  toward  burdens  heaped 
on  them  for  somebody  else's  benefit.  Are  not  their 
descendants  worthy  to  hold  the  same? 

Third,  Equal  Rights.  Equality  comes  next  to  Liberty. 
The  trait  that  always  distinguishes  protectionism  :  prefer- 
ring a  small  part  to  the  whole,  boasting  of  the  gains  made 
by  a  few  as  signs  of  national  prosperity,  without  consider- 
ing the  cost  to  the  many  at  which  they  were  attained — 
has  already  been  noted,  and  must  make  its  appearance 
several  times  again  before  we  finish  this  examination. 
That  trait  is  essentially  oligarchic.  The  ancient  French 
aristocracy,  the  titled  few  who  treated  the  great  multitude 
and  the  government  itself  as  born  or  made  to  serve  their 
pleasures,  and  keep  all  trouble  aloof  from  them,  were  not 
unlike  the  knot  of  Protection's  beneficiaries  in  our  own 
country  to-day,  who  expect  government  aid  to  increase 
their  gains  at  the  general  expense  ;  seeming  sincerely  to 
believe  that  the  country  is  thriving  only  in  their  pros- 
perity. The  one  and  the  other  are  alike  foes  to  equality. 
Here,  as  elsewhere,  the  party  most  active  in  behalf  of  a 
principle  twenty  years  ago  is  now  seen  to  have  gradually 
but  effectually  turned  against  it. 

The  welfare  of  the  negro  I  do  not  hesitate  to  include, 
despite  past  party  history,  among  the  causes  better 
advanced  by  Democratic  than  Republican  policy  at  this 
day.  What  are  the  present  Republicans  doing,  what  do 
they  propose  to  do  for  this  race?  They  appoint  more  to 
federal  office  from  it,  perhaps  ;  but  when  we  come  to  solid 
legislation,  the  only  measure  to  which  they  can  point  us, 
is  one  that  they  tried  to  pass  through  the  Fifty-first  Con- 
gress, to  secure  and  insure  the  counting  of  its  vote  on 
their  own  side  in  Congressional  elections.     The  evil  that 


ABUSE    OF  PARTY   ALLEGIANCE.  35 

that  measure  would  have  brought  to  its  alleged  benefici- 
aries, real  victims,  in  exasperating  against  them  the  whites 
among  whom  they  have  to  live,  without  granting  them 
any  adequate  defence,  is  immeasurably  more  evident  than 
the  advantage  that  could  come — to  any  but  the  schemers 
who  seek  to  use  them  for  a  perpetual  cat's-paw.  Look- 
ing at  the  economic  effect  of  legislation  on  the  negro,  we 
cannot  separate  his  interests  from  those  of  his  employers, 
whose  prosperity  can  alone  give  activity  to  the  demand  on 
which  he  depends  for  his  wages.  His  employment  is 
almost  all  agricultural,  so  that  his  interests  are  naturally 
with  agriculture,  and  therefore  on  the  side  of  free  trade. 
Finally,  the  cause  of  National  Credit,  with  which  are 
identified  the  maintenance  of  a  sound  currency,  the 
security  of  business  transactions,  and  more  of  our  general 
prosperity  than  can  easily  be  told  or  realized.  For  years 
after  Republican  doctrine  began  to  develop  antagonistic 
points,  I  held  to  the  party  on  this  point  ;  arguing  from 
many  facts  which  I  have  no  need  to  specify,  that  the 
public  credit  was  safer  with  that  party  at  the  helm.  No 
one  who  has  contrasted  the  sound  conservative  adminis- 
tration of  Mr.  Cleveland  with  the  schemes  for  reckless 
waste  of  the  public  treasure  which  have  been  adopted  by 
the  Congress  succeeding  it,  will  need  to  be  told  how  my 
old  arguments  lost  their  force.  As  a  general  principle, 
the  national  credit  is  not  secure  under  Protectionist  rule, 
because  of  the  close  association  between  protection  and 
prodigality.  Why  this  association  ?  First,  the  systematic 
encouragement  of  dependence  on  governmental  favor 
raises  up  a  host  of  clamorers  for  public  bounty,  in  pen- 
sions and  other  forms,  who  are  always  most  eager  to  be 
conciliated  at  the  very  time  when  those  in  power  are 
weakest  to  hold  out  against  them.  Second,  the  inordinate 
revenues    brought    in    by    high    tariffs    inevitably    excite 


3^^  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

cupidity.  Third,  the  luickstcrinj^  and  log-rolhng  methods 
by  which  protective  duties  arc  enacted  and  maintained, 
have  a  <^eneral  tendency  to  make  legislation  a  matter  of 
bargain  more  than  of  public  policy,  and  the  legislator 
often  discovers  that  the  bit  of  protection  he  wanted  to  get 
or  to  keep  for  his  own  constituents  has  brought  him  in- 
convenient obligations.  In  illustration  of  these,  the  Avork 
of  the  late  "  Thousand-Million-Dollar  Congress  "  admira- 
bly serves.  The  Dependent  Pension  Act,  with  its  annual 
drain  from  the  Treasury  ;  the  Silver  Act,  with  its  inflation 
of  the  national  debt  by  several  millions  a  month  to  be 
expiated  by  sacrifices  some  time  in  the  future,  all  for  the 
purpose  of  giving  the  miners  of  that  metal  a  better  market 
than  they  could  otherwise  find  ;  the  Shipping-subsidy 
bills,  with  their  rich  possibilities  for  expenditure  of  the 
public  store ;  the  Naval  Construction  acts ;  are  all  doing 
their  utmost  to  waste  our  resources,  and  to  cripple  our 
credit — for  the  credit  of  man  or  nation  inevitably  suffers 
by  the  forming  and  fixing  of  prodigal  habits.  The  pa- 
tience wath  which  people  will  bear  taxation,  when  they 
see  it  directed  to  objects  such  as  these,  cannot  perman- 
ently be  reckoned  on ;  the  aw'akening  must  certainly 
come,  and  better  for  us  if  we  anticipate  it  by  sounder 
business  methods  than  if  we  are  left  to  feel  it  in  attacks 
on  our  financial  honor.  With  an  eye  to  what  is  in  store 
for  us  hereafter,  I  accept  the  party  of  low  taxes  as  the 
best  upholder  of  the  national  credit. 

No  one  could  have  enlisted  in  the  Free  Soil  legion  w^hen 
that  issue,  forced  to  the  battle's  front  by  the  Fugitive 
Slave  Act,  the  Compromise  Repeal,  and  the  attempts  on 
Kansas  had  just  swelled  it  to  the  proportion  of  an  army 
and  earned  it  the  party  name  of  Jefferson,  venerated 
champion  of  freedom  ;  could  have  shared  those  early  de- 
feats in  M-hich   it    refused    to    stav  defeated :    could  have 


ABUSE    OF  PARTY  ALLEGIANCE.  37 

rejoiced  in  the  dawn  of  a  new- era  when  it  carried  Lincohi 
to  the  executive  chair,  and  have  felt  e\'erything  most 
sacred  to  popular  government  involved  in  having  the 
Chosen  of  the  Nation  acknowledged  by  those  whom  he 
had  overcome  at  the  polls ;  could  have  upheld  him 
through  dark  hours  and  bright  hours,  down  to  his  un- 
timely death  in  the  midst  of  victory  ;  could  have  wel- 
comed the  legislation  needed  to  confirm  the  results  of 
the  war  and  strengthen  the  national  credit ;  no  one  could 
have  passed  through  this  experience  and  remain  impas- 
sive to  the  name  Republican.  The  country  contained  no 
truer  Republican  than  I,  while  the  party  was  doing  its 
appointed  work  ;  and  I  cannot  admit  that  in  regretfully 
disclaiming  the  name,  now  that  it  has  lost  its  significance, 
I  am  less  a  follower  of  the  early  Republicans,  have  less 
right  to  participate  in  the  glories  of  the  better  days  of 
the  party,  than  any  man  in  the  land.  I  even  regard  as 
my  most  important  point  the  one  I  have  just  undertaken 
to  establish,  that  the  benefits  brought  us  by  the  party  in 
the  past  are  more  secure  in  the  hands  of  its  present 
antagonists.  Unless  I  am  egregiously  deceived,  this 
point  is  incontestable  —  indubitable.  As  the  greatest 
enemies  of  Union  in  these  days  are  those  who  preach 
sectional  hatred,  the  most  conspicuous  exemplification  of 
which  is  found  in  the  attacks  by  Protectionists  on  the 
South  ;  so  it  is  these  Protectionists  with  whom  lovers  of 
the  Union  have  to  reckon.  As  the  bondage  now  found 
most  galling  is  that  of  the  hampered  purchaser,  particu- 
larly the  wage-earner,  debarred  from  such  use  of  his 
wages  as  would  best  supply  his  needs,  so  it  is  the  Protec- 
tionists with  whom  the  friends  of  liberty  are  confronted. 
As  that  sacrifice  of  the  interests  of  producers  of  export- 
able goods  to  those  of  producers  of  non-exportable  goods 
which  it  is  the  purpose  of  Protectionists  to  compel,  that 


2079CO 


38  ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

sacrifice  of  all  interests  not  urged  by  an  active  lobby  to 
those  that  are,  is  the  most  violent  invasion  of  equal 
rights  that  our  present  institutions  show;  so  to  equal 
rights,  also,  protectionism  is  the  enemy.  As  the  greatest 
danger  to  the  nation's  credit  is  in  the  multifarious  jobs 
and  extravagances  which  are  at  once  the  effect  and  the 
motive  of  high  taxes;  so  its  suitable  guardians  are  not 
among  those  who  maintain  them. 

True  allegiance  to  the  principles  of  the  party  in  its 
better  days,  therefore,  is  shown  by  opposing  the  party 
now.  This  is  no  eccentric  whimsey  or  labored  paradox. 
Views  shared  and  boldly  avowed  by  many  old  pillars  and 
ornaments  of  the  Republican  party,  including  its  great 
body  of  thoughtful  economic  students  led  by  McCulloch, 
Walker,  and  others,  the  representatives  of  the  great  anti- 
slavery  names  of  Garrison,  Lovejoy,  and  Andrew,  and 
the  pride  of  American  literature  in  Lowell,  Higginson,  and 
Curtis,  mark  the  transition  of  Republican  into  "  free- 
trader "  as  logical  and  natural  enough.  Did  the  Repub- 
lican party  contain  a  braver,  brighter  or  better  element 
than  these  ?  Can  it  be  denied  that  what  they  always 
were  as  Republicans  they  still  are  ? 

EX-CONFEDERATES. 

War  feeling  is  intensified  party  feeling ;  and  those  who 
cannot  arouse  the  latter  in  sui^cient  vigor,  are  very  apt 
to  fortify  themselves  by  a  little  addition  of  the  former. 
The  majority  of  the  ex-Confederates  favor  free  trade,  it 
is  shown,  hence  it  is  argued  that  all  who  opposed  the 
Confederacy  are  bound  to  oppose  free  trade.  This  con- 
clusion would  be  impregnable  if  we  could  only  first  be 
assured  that  it  was  the  wickedness  of  their  hearts  that 
inclined  the  ex-Confederates  to  free  trade.  As  soon  as  it 
is  admitted   that   thev  follow  their  own  interest  in  this, 


ABUSE    OF  PARTY  ALLEGIANCE.  39 

the  conclusion  becomes  utterly  worthless ;  for  their  inter- 
est may  possibly  coincide  with  that  of  some  more  popu- 
lar set  of  people.  To  show  that  it  is  really  their  interest 
they  consider,  these  ex-Confederates  point  to  the  fact  that 
they  are  chiefly  agricultural  ;  that  their  leading  product, 
cotton,  cannot  be  protected — being  largely  exported, 
while  its  individual  producers  are  too  widely  scattered  to 
be  associated  in  a  "  trust  " — and  that  import  duties  on 
the  goods  sent  in  payment  for  their  exported  cotton,  by 
diminishing  the  purchasing  power  of  that  product,  have 
precisely  the  same  practical  effect  as  would  a  duty  on  the 
cotton  paid  by  them  on  its  exportation.  Their  plea  is 
no  feeble  one,  and  it  applies  equally  well  to  exporters  of 
wheat  and  of  cattle  ;  even  to,  exporters  of  machinery,  as 
I  have  long  known,  and  as  a  good  many  other  manu- 
facturers are  now  finding  out.  We  enjoy  an  advantage 
over  the  farmer,  however,  for  protection  enables  us  some- 
times by  a  "  trade  understanding "  to  pile  up  extra 
charges  on  home  consumers. 

But  even  if  the  plea  of  the  ex-Confederates  had  less 
truth  in  it,  something  would  remain  to  be  said  as  to  the 
propriety  of  keeping  up  a  war  sentiment  against  them. 
It  is  now  quite  impossible  to  deal  with  their  States  as 
with  conquered  provinces.  As  members  of  the  Union 
they  must  be  members  on  equal  footing,  for  the  sufficient 
reason  that  our  national  Constitution  provides  no  other 
status  for  States.  We  tried  the  province  plan  shortly 
after  the  civil  war,  and  had  to  confess  it  a  failure.  After 
all,  moreover,  was  not  bringing  them  back  as  members  of 
the  Union  the  avowed  motive  of  the  enormous  labors 
and  sacrifices  we  made  in  the  war  ?  Had  we  avowed 
another  motive,  had  we  told  all  friends  of  the  Union  in 
the  border  States  that  our  real  purpose  was  to  make  sub- 
jects, who  could  be  forced  to  pay  tribute   for  the  support 


40  RCONOMIC  AND  INDUSTRTAL   DELUSIONS. 

of  industries  in  our  own  section,  how  much  assistance 
could  we  have  obtained  from  them  ?  And  without  their 
loyal  co-operation,  who  believes  that  the  great  rebellion, 
difficult  as  we  found  its  suppression  at  best,  could  possi- 
bly have  been  brought  under  control  ?  This  is  the  real 
meaning  of  those  who  seek  to  identify  the  protectionism 
of  this  day  with  the  defence  of  the  government  in  1861, 
who  exhort  the  old  soldiers  to  "  vote  as  they  shot  "  ;  they 
mean  to  confess  that  the  rebels  spoke  truly  when  they  said 
we  were  engaged  in  a  war  of  conquest,  and  that  we  spoke 
falsely  when  we  claimed  to  be  preserving  the  Union  of 
our  fathers  ; — this  they  mean,  or  they  mean  nothing. 

I  would  gladly  make  an  elaborate  argument  in  favor 
of  a  recognition  of  former  Confederates  as  fellow  mem- 
bers of  a  restored  Union,  were  it  in  the  least  necessary. 
The  partisans  of  high  tariffs  have  admitted  that  there  is 
no  sincerity  in  their  opposition  to  Confederates,  by  their 
attitude  in  recent  Virginia  struggles.  What  is  called 
"  the  Republican  party  "  in  that  State,  is  well  known  to 
be  in  these  days  a  close  corporation  of  ex-rebels,  organ- 
ized as  singly  and  solely  for  the  purpose  of  dividing  up 
the  offices,  as — for  instance — is  often  alleged  to  be  the 
case  with  that  estimable  organization,  Tammany  Hall,  in 
our  chief  city.  Yet  a  careful  search  through  all  the 
organs  of  the  high-tariff  faith  will  bring  out  no  note  of 
protest,  everywhere  one  chorus  of  laudation  for  this 
choice  coterie  ;  the  taint  of  rebellion  hurts  these  allies 
quite  as  little  as  that  of  repudiation  of  a  State's  debt,  or 
as  their  pervading  and  indelible  taint  of  incorrigible 
demagoguery.  No,  we  need  go  no  further  than  this  to 
convince  ourselves  that  the  ex-rebel  is  only  objectionable 
to  Protectionists  when  he  cannot  be  caught  and  used  by 
them — just  as  the  grapes  were  objectionable  to  the  fox 
in  the  fable. 


ABUSE    OF  PARTY  ALLEGIANCE.  4I 

HATRED    OF    ENGLAND, 

The  most  effective  of  these  appeals  to  bUnd  party- 
feehng  intensified  as  war-feehng,  and  the  most  disgraceful, 
is  that  made  to  national  hatred.  Hatred  comes  so  much 
easier  than  esteem,  to  men  of  low  organization,  that  it  is 
not  disheartening  to  find  in  semi-savage  peoples  little 
else  that  could  be  called  patriotism  than  hostility  to 
other  peoples.  This  being  a  mark  of  low  civilization, 
advanced  civilization  is  naturally  shown  in  its  extir- 
pation. 

Contemptible  as  is  such  a  sentiment  towards  any 
nation,  it  is  especially  so  toward  our  nearest  of  kin,  the 
country  to  which  we  owe  all  that  we  most  value  in  our 
own  except  mere  territorial  extent — race,  traditions,  lan- 
guage, laws,  parliamentary  institutions ;  the  country 
which,  apart  from  any  particular  claims  on  us,  challenges 
the  admiration  of  mankind  as  furnishing  the  best  exam- 
ple of  liberty  under  order,  long-continued  progress  and 
industrial  energy  that  the  world  has  or  has  ever  had  to 
show.  This  is  not  the  place  to  consider  the  various  pleas 
that  are  brought  forward  to  justify  the  hatred  of  Great 
Britain  to  which  Protectionists  appeal.  Suffice  it  here 
that  that  hatred,  rooted  as  it  is  in  cowardice  alone,  would 
be  despicable  and  unworthy  even  were  it  not  demonstra- 
bly needless. 

The  fine  frenzy  of  Protectionists  against  the  mother 
country  ought,  methinks,  to  be  mitigated  by  the  remem- 
brance that  we  owe  to  her  the  very  protective  system  to 
which  they  so  fondly  cling.  They  call  it  an  "  American 
system " — of  course,  to  flatter  the  shallow  simpletons 
among  whom  they  expect  their  recruits — the  scheme  they 
have  copied  from  that  prevailing  in  Great  Britain  to 
within  a  short  half  century  ;  and  thus,  in  denouncing  the 
system  which   that   country  now  rejoices  in  as  a  success, 


42  KCOMOM/C  AND   INDUSTRIAL    DELUSIONS. 

they  are  cherishing  and  praising  the  one  that  she  tried 
faithfully  for  long  years,  and  dismissed  as  a  failure. 
Beautiful  thought— is  it  not  ?  They  refuse  to  wear  Eng- 
land's new  uniform  for  the  delight  of  strutting  around  in 
her  cast-off  old  rags  !  They  reject  an  invitation  to  dine 
with  her  in  her  banquet-hall  for  the  greater  glory  of 
gorging  with  the  broken  victuals  in  her  back  kitchen  ! 
And  that  they  extol  as  "  the  American  System  !  " 

WASTEFULNESS    OF    WAR. 

Were  there  no  other  objection  to  the  unchecked 
growth  of  national  hostility,  a  weighty  objection  would 
be  found  in  the  fact  that  it  does  not  pay.  War  is  its 
logical  expression.  War  makes  waste,  and  waste  makes 
want.  Who  would  dare  to  speak  flippantly  of  a  possible 
war  between  our  people  and  the  British,  if  he  reflected 
that  a  thousand  million  dollars  taken  from  the  two 
nations  and  sunk  in  the  sea  would  damage  them  less, 
cause  far  less  suffering  among  them,  than  one  month  of 
war,  or  even  a  declaration  of  war  ?  Who  would  compare 
with  this  certain,  severe,  irreparable  loss  and  distress,  the 
wildest  estimate  by  the  craziest  Protectionist  of  such  loss 
and  distress  as  we  could  sustain  by  admitting  British 
goods  free  ?  The  suffering  would  be  keener  on  their 
side,  doubtless,  for  it  is  much  worse  to  be  deprived  of  the 
foods  and  textile  materials  themselves  than  merely  of  a 
good  sale  for  those  products.  But  the  latter  evil  is  seri- 
ous enough.  The  best  market  for  our  agricultural  sur- 
plus, that  in  which  the  value  of  our  whole  crop  of  wheat 
and  cotton  is  fixed,  is  in  England  ;  cut  that  off,  and  sales 
would  languish,  prices  would  fall,  and  privation  would 
visit  the  home  of  every  producer. 

War   makes   debt,    and    debt    is   slaven'.      Each  of  the 


ABUSE    OF  PARTY  ALLEGIANCE.  43 

huge  national  debts  of  Europe  dates  like  our  own  from  a 
war ;  whether  unsuccessful  or  successful,  death  and  maim- 
ing, torments  and  bereavements  are  not  more  distinctive 
of  wars  than  are  waste  and  consequent  burdens,  some 
borne  in  privation  and  exposure  at  the  time,  some  handed 
down  to  pinch,  grind,  and  crush  another  generation. 
With  Holland  still  suffering  from  her  protracted  agony  in 
expelling  Philip  and  Ferdinand  ;  with  Germany  so  pros- 
trated by  her  Thirty  Years'  War,  and  France  by  her 
chase  after  glory  under  Louis  XIV.,  that  it  is  said, 
"  one  third  of  the  nation  starved,  and  they  were  better 
off  than  half  the  remainder  "  ;  with  all  Europe  so  shaken, 
torn,  and  battered  by  the  Corsican  avatar  of  Alaric,  whose 
"  stature  reached  the  sky,  and  on  his  crest  sat  Horror 
plumed,"  that  even  the  "  three  millions  of  Frenchmen  " 
whose  sacrifice  in  following  him  Lafayette  lamented — 
with  as  many  sacrificed  by  other  countries  in  the  effort 
to  subdue  him — form  a  bare  handful  to  the  number  of 
lives .  he  butchered,  widowed,  starved,  orphaned,  and 
wrecked,  while  doubling  every  nation's  indebtedness ; 
with  our  land  prepared  to  add  her  own  fresh  tale  of  de- 
vastation and  misery,  and  the  end  of  her  sacrifices  not 
yet,  we  have  few  of  history's  pages  to  turn  before  encoun- 
tering some  instance  of  war's  wastes  in  reckless  rapine  or 
its  sequels  in  suffering  and  sorrow. 

These  reflections  are  not  novel,  and  ought  at  the  present 
day  to  be  familiar  to  every  mind.  How  terribly  costly  > 
•the  warfare  arising  from  national  hatreds,  and  even  the 
preparations  for  warfare  which  occupy  so  much  time, 
thought,  and  energy  not  given  to  actual  fighting,  a  chorus 
of  sufferers  has  again  and  again  bewailed,  but  the  useless- 
ness  of  this  lavish  expenditure  has  never  been  duly  ex- 
posed. To  a  few  thoughts  on  this  theme  it  is  right  to 
ask  the  attention  of  reflecting  readers. 


44  ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

INUTILITY    OF    DEFENSIVE    MEASURES. 

Of  the  need  for  national  defences  a  part — growing 
ever  smaller  with  the  advance  of  civilization — is  real,  and 
a  greater  part  imaginary.  The  millennium  of  Universal 
Peace  is  nearer  than  cynics  pretend  ;  for  us  in  this  fav- 
ored republic  it  seems  necessary  only  to  resolve  that  we 
have  it,  in  order  to  win  its  blessings  in  reality.  Why 
have  we  been  so  often  reminded  that  the  bearing  of  na- 
tions toward  each  other  has  always  followed  that  of  indi- 
viduals toward  each  other  some  centuries  befoi-e,  the  one 
slowly  improving  in  fairness,  gentleness,  and  Christian 
spirit  as  the  other  had  long  ago  shown  it  the  way,  if  we 
are  not  to  conclude  that  the  best  course  for  nations  is 
what  experience  has  shown  wisest  for  individuals  ?  We 
know  that  men  used  to  carry  weapons  habitually,  at  all 
formal  meetings  of  polite  society,  and  we  know  that 
men's  lives  are  safer  since  they  have  ceased  to  do  so. 
We  know  that  men  are  never  met  without  their  "  shoot- 
ing-irons "  in  some  parts  of  this  country,  and  we  know 
that  this  practice  leads  to  many  homicides,  increasing 
rather  than  removing  danger.  Among  individuals  de- 
fences do  not  defend,  because  they  invite  tenfold  more 
attacks  than  they  repel.  The  fact  that  a  man  is  arming 
himself  for  any  purpose,  immediately  indicates  him  as  a 
source  of  danger  to  others  similarly  situated,  who  would 
not  otherwise  have  become  alarmed.  The  fact  that  hos- 
tility fills  so  conspicuous  a  place  in  his  own  apprehension, 
suggests  it  to  others  ;  for  the  better  to  meet  his  fancied 
perils,  he  might  himself  attack,  and  the  dread  lest  he 
will,  naturally  induces  others  to  be  beforehand  in  attack- 
ing him.  If  one  is  not  strong  enough,  two  or  more  who 
feel  equally  menaced  will  combine  against  him.  Measures 
for  defence  thus  easily  become  a  real  danger  from  which 


ABUSE    OF  PARTY  ALLEGIANCE.  45 

those  who  neglect  them,  who  give  their  energies  to  the 
service  of  the  community,  are  free. 

It  is  not  otherwise  with  nations,  at  tlie  same  advanced 
stage  of  civilization.  In  the  talk  of  war  with  which 
European  news  is  filled,  it  is  the  countries  of  large 
armaments  which  are  most  threatened — against  those  do 
others  show  apprehensions,  and  contrive  combinations. 
There  is  no  talk  of  an  attack  on  the  United  States,  for 
the  reason  that  no  one  fears  an  attack  from  us,  and  we 
have  taken  none  of  those  measures  for  defence  which 
always  and  inevitably  appear  to  other  nations  as  menaces 
of  attack.  In  reducing  our  standing  army  we  have  been 
wise  ;  in  slighting  our  navy  and  coast  fortifications,  we 
have  been  far  wiser  than  we  ever  meant  to  be.  How 
else,  indeed,  could  we  have  avoided  irritation,  suspicion, 
and  alarm  against  us  on  this  continent,  where  we  hold 
so  crushing  a  superiority  of  power  ?  Has  it  been  no 
benefit  to  our  country  to  be  able  to  act  fairly  and  frankly 
toward  the  feebler  republics  to  the  south  of  us,  without 
raising  a  perpetual  doubt  of  our  good  faith  ?  Often  has 
it  been  said,  "  If  you  wish  peace  prepare  for  war,"  but  I 
sincerely  believe  the  reverse  of  this  saw  to  be  much  nearer 
truth.  • 

If  strengthening  our  defence  really  weakens  us  by  the 
hostility  it  invokes,  what  can  we  gain  by  fostering  a  sen- 
timent which  calls  out  nothing  but  hostility  and  makes 
us  no  whit  stronger  in  any  way  ?  We  ought  always  to 
remember  that  it  is  possible  to  render  an  alien  nation  of 
service  to  us  without  reducing  it  by  conquest.  We  may 
secure  its  good  will  by  friendly  dealing  and  feeling  on 
our  own  side.  In  this  age  of  the  world,  when  men  of 
different  nations  have  so  many  other  points  of  contact 
besides  battle-fields  and  sumptuous  halls  where  astute 
diplomats  contend,  the  second   way,   undeniably  far  less 


46  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

costly,  is  in  every  respect  preferable.  Suppose  that  in- 
stead of  trusting  our  neighbors,  we  had  to  depend  on 
fortifying  ourselves  against  them,  as  "  in  the  golden 
prime  "  of  the  middle  ages  !  Precisely  that  sort  of  thing 
protection  undertakes  to  provide  for  us,  only  a  little  less 
obviously,  directly,  and  universally.  The  terror  into 
which  the  thoroughly  protected  mind  lashes  itself  at  the 
thought  of  som.e  imaginary  invasion  of  our  markets,  or 
what  not,  to  which  some  foreign  power  would  subject  us 
if  we  did  not  studiously  kindle  and  fan  to  flame  our  anger 
against  it,  is  almost  too  pathetic  to  be  altogether  ridiculous. 

OTHER    EVILS    DUE    TO    WAR. 

Serious  as  would  be  the  indictment  against  the  fruition 
in  war,  of  the  hostile  sentiments  habitually  invoked  as  a 
support  for  protection,  even  were  there  no  count  but 
wastefulness  in  the  indictment,  that  count  is  really  light- 
est among  the  charges  it  has  to  answer.  I  need  not  re- 
iterate or  emphasize  the  tale  of  anguish  which  has  always 
aroused  the  sympathies  of  every  human  heart  capable  of 
sympathy ;  for  the  sufferings  which  war  entails  have 
grown  almost  commonplace.  But  it  is  the  duty  of  every- 
one who  takes  up  the  subject  to  lay  stress  upon  the  moral 
degradation  which  is  an  inseparable  part  of  every  war — 
even  the  best  ;  for  the  words  of  Franklin  are  universally 
true  :  "  There  never  was  a  good  war,  or  a  bad  peace." 

The  apologists  of  this  sum  of  evils  are  fond  of  portray- 
ing the  "  nobility  of  self-sacrifice  "  ;  but  when  we  add  to 
their  picture  the  sacrifices  that  are  not  noble — of  order  for 
turmoil — of  honor  and  justice  for  unbridled  selfishness — 
of  moral  law  for  brute  force — of  sympathy  and  mercy  for 
pitiless  cruelty — of  courtesy  and  refinement  for  lust  and 
license — of  the  satisfaction  of  the  intellectual  for  that  of 
the  animal  nature — all  of  which  are  exacted  by  war,  that 


ABUSE    OF  PARTY  ALLEGIANCE.  4/ 

picture  becomes  at  the  same  time  more  faithful  and  less 
attractive.  He  who  could  be  gratified  and  delighted  by 
military  glory  must  be  half  blinded  ;  he  must  overlook 
the  agonies  of  the  field — the  wailings  for  the  lost— the 
privations  of  the  homeless — the  heavy  burden  of  public 
debt — the  vice  and  corruption  and  debasement,  which  are 
its  necessary  price.  He  must  reject  Christ's  message  of 
mercy  and  love ;  he  must  despise  the  Golden  Rule.  In 
the  qualities  of  Christian  manhood,  those  most  famed  in 
arms  are  no  longer  to  be  rated  great  men — they  are  im- 
perfectly finished,  defective  men. 

The  Christian  religion  is  founded  on  the  teachings  of 
Jesus,  and  Peace  is  the  very  core  of  those  teachings.  The 
early  Christians  all  showed,  by  profession  and  by  prac- 
tice, the  same  firm,  unrelenting  opposition  to  the  wicked- 
ness of  war  that  has  since  been  taught  by  George  Fox, 
W.  L.  Garrison  and  Lyof  N.  Tolstoi.  Luther  tells  us 
that  "  War  is  the  greatest  plague  that  can  afiflict  human- 
ity." Every  one  who  cherishes  Christianity  already 
knows  that  it  is  identified  with  Peace,  in  spirit  and  in 
principle.     To  whom,  then,  have  I  need  to  appeal? 

PROTECTION    AND    NATIONAL    HOSTILITY. 

Protectionism  is  as  closely  identified  with  the  war 
spirit  as  Christianity  is  with  peace.  The  connection  is 
twofold  :  national  enmity  is  used  in  carrying  protective 
measures,  and  it  is  fatally  potent  in  blinding  their  victims 
to  their  real  tendency  ;  and  protective  measures  are  at 
the  same  time  a  fruitful  source  of  national  enmity.  If 
we  look  in  Protection  for  the  demoralization  of  War,  its 
ally — expect  to  find  it  most  active  when  Justice,  Truth 
and  Mercy  sleep — ready  with  all  to  lavish  on,  endure  for, 
permit  to,  pardon  in  its  successful  champion,  whatever 
vices  may  stain  his  character  —  we  are  not  destined  to 


48  ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

disappointment.  Men  who  take  part  in  political  conten- 
tions, be  their  cause  bad  or  good,  are  rarely  over-scrupu- 
lous ;  but  I  think  I  have  found  a  degree  of  malignity, 
recklessness  and  baseness  among  approved  advocates  of 
protection,  surpassing  even  the  politicians'  standard. 

Commerce,  in  striking  contrast,  makes  as  strongly  for 
peace  as  Christianity  itself.  By  giving  men  more  inter- 
ests in  common,  making  them  better  known  to  one  an- 
other, and  encouraging  them  to  provide  for  one  another's 
wants,  it  knits  them  closer  together  ;  and  though  it  has 
its  source  in  self-interest,  it  is  a  most  powerful  stimulus 
to  broad  human  sympathy.  It  widens  the  mental  hori- 
zon, makes  over  the  citizens  of  one  limited  country  into 
citizens  of  the  world,  studies  the  common  interest  of 
mankind  in  providing  the  most  advantageous  division  of 
labor,  stimulates  invention  and  promotes  progress.  It 
feeds  the  hungry  and  clothes  the  naked,  while  war  pau- 
perizes, demoralizes,  brutalizes.  It  relieves  the  scarcity 
of  one  region  by  the  plenty  of  another,  while  war  gorges 
the  strong  with  the  spoils  of  the  weak.  It  adds  value  to 
the  articles  it  takes  and  those  it  brings,  while  war  withers 
or  corrupts  whatever  it  touches. 

The  promotion  of  commerce  is  a  far  nobler  and 
worthier  aim  for  an  enlightened  government  than  any 
that  can  be  realized  by  victorious  warfare.  This  chapter 
has  had  much  to  tell  of  political  platforms  ;  it  cannot 
close  more  fittingly  than  with  a  sentiment  from  that  brief 
statement  of  principles,  drafted  by  the  hand  of  Jefferson 
himself,  upon  which  the  author  of  the  Declaration  of 
Independence  was  elected  to  the  presidency : 

"  Free  Commerce  with  all  nations  ;  entangling  alliances 
with  none." 


CHAPTER  III. 

BALANCE  OF  TRADE  AND  CURRENCY  SUPPLY. 

Every  mortal  has  a  special  proneness  to  some  special 
besetting  sin,  and  quite  as  truly  has  every  mind  troubled 
with  the  weakness  that  renders  it  vulnerable  to  the  soph- 
istries of  the  Protectionist,  some  special  stumbling-block 
in  the  shape  of  a  plausible,  misleading  argument,  which 
is  specially  calculated  to  lay  him  prostrate.  No  stumbling- 
blocks  have  been  the  cause,  within  my  own  observation, 
of  more  sad  falls  for  the  well-disposed  but  heedless  way- 
farer— no  delusions  are  more  natural  or  more  prevalent — 
than  those  to  be  examined  in  this  chapter. 

Is  an  ample  currency-supply  a  good  thing?  Then 
what  policy  is  better  than  that  adapted  to  secure  it, 
and  what  could  be  better  adapted  to  secure  it  than  a 
device  which  lets  in  money  and  keeps  out  goods  ?  Are 
we  more  interested  in  selling  our  goods  in  other  countries 
than  in  giving  other  countries  a  market  here  ?  Then 
why  not  systematically  favor  selling  and  discourage 
buying  ?  That  is  precisely  what  protection  undertakes 
and  professes  to  do.  Its  attacks  are  all  directed  against 
imports  and  not  against  exports.  So  easily  are  people 
persuaded  by  confident  claims,  that  it  is  too  commonly 
imagined  as  not  only  desirable  but  possible  to  reduce 
imports  and  leave  exports  undisturbed.  That  project 
recalls  an  old  stor\'  of  two  holes  in  a  sand-bank,  where  a 
flood  came  and  w  ashed  awa}'  the  sand-bank  without  dis- 
4  49 


so  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

turbing  the  holes.  A  little  attention  and  reflection  will 
easily  show  how  any  device  of  the  kind  will  work  in 
practice. 

EFFECTS    OF    A    " FAVORABLE "    BALANCE. 

Suppose  we  set  our  tariff  apparatus  to  work,  contriving 
it  so  that  we  send  abroad  a  few  hundred  million  dollars' 
worth  of  goods  more  than  we  bring  back,  and  keeping 
this  up  as  long  as  we  can.  We  thus  have  our  balance  of 
trade  "  favorable."  Our  contrivance  might  take  either  of 
three  forms :  we  might  send  our  wares  out  and  dump 
them  into  the  sea ;  we  might  exchange  them  for  less  than 
they  are  worth,  and  let  the  foreigners  do  us  out  of  the 
balance  ;  or  we  might  receive  the  difference  in  hard  gold. 
But  (supposing  the  third  way  preferred)  it  is  not  possible 
to  increase  the  supply  of  any  commodity  in  any  market, 
if  there  is  nothing  to  excite  an  increased  demand,  without 
lowering  its  exchange  value.  In  the  case  of  gold,  we 
would  call  this  lowering  an  increase  in  the  price  of  other 
commodities,  but  the  difference  is  in  phrase  and  not  in 
meaning.  The  expense  in  gold,  of  producing  goods  for 
export,  must  continually  increase  as  long  as  the  gold 
importations  last,  while  the  return  for  the  goods  not  only 
does  not  increase,  but,  as  our  absorption  of  gold  has 
created  a  comparative  scarcity  in  the  countries  that  send 
it,  actually  decreases.  Those  other  countries,  being  thus 
under  conditions  precisely  opposite  to  our  own,  will  be 
able  to  offer  us  their  goods  for  a  smaller  price,  while  we 
become  at  the  same  tim-e,  with  our  increased  stock  of 
gold,  more  disposed  to  buy  them.  As  this  doubly-acting 
tendency  must  grow  stronger  as  long  as  the  gold  contin- 
ues to  come  in,  it  is  plain  that,  under  steady  conditions 
of  supply  and  demand,  it  must  end  by  overcoming  the 
obstacles  we  have  set  to  the  importation  of  goods,  mak- 


BALANCE   OF  TRADE   AND    CURRENCY   SUPPLY.       5 1 

ing  imports  again  equal  to  exports.  As  Smith  reminds 
us,  "  When  you  dam  up  a  stream  of  water,  as  soon  as  the 
dam  is  full,  as  much  water  must  flow  over  the  dam-head 
as  if  there  was  no  dam  at  all,"  and  our  commercial  history 
shows  that  it  requires  a  surprisingly  short  time  to  fill  the 
dam. 

This  now  seems  such  simple  common  sense  that  it  is 
difificult  to  understand  how  far  it  was  from  the  compre- 
hension of  men  before  "  The  Wealth  of  Nations  "  was 
written.  In  the  good  old  days,  some  centuries  past, 
when  it  was  thought  that  gold  was  wealth  and  wealth  was 
gold,  and  when  the  nations  used  to  puzzle  their  brains 
over  ways  and  means  of  getting  and  keeping  the  precious 
metal  within  their  territory,  Spain  prohibited  its  exporta- 
tion by  severe  penalties ;  and  this  substitution  of  the 
measure  of  wealth  for  wealth  itself — the  shadow  for  the 
substance — is  undoubtedly  one  of  the  reasons  why  that 
country,  mistress  of  half  the  world  in  the  sixteenth  cen- 
tury, with  command  of  all  the  richest  mines,  steadily  fell 
off  until  she  ranked  among  the  poorest  nations  of  Europe. 
It  was  discovered  before  1776  that  notwithstanding  a 
high  tax  on  exported  gold,  she  was  exporting  almost  all 
that  her  mines  brought  her.  The  inhabitants  had  more 
jewelry  and  plate  than  was  usual  elsewhere,  and  that  was 
all  that  this  policy  did  for  her. 

HOW    THE    BALANCE    IS    KEPT    IN    THE     UNITED    STATES. 

Instead  of  Spain  in  past  ages,  let  us  now  look  at  our 
own  country  in  the  present  century.  The  fact  which  is 
so  conclusively  established  by  a  careful  study  of  the  fig- 
ures, that  the  effect  of  our  high  duties  has  been  to  dis- 
courage exportation  along  with  importation  of  merchan- 
dise, will  be  fully  set  forth  in  the  chart ;  but  as  that  treats 


52  ECONOMIC  AiVn   INDUSTRIAL   DELUSIONS. 

our  foreign  trade  as  a  whole,  without  distinguishing  the 
countries  with  which  we  deal,  it  is  worth  while  to  show 
how  different  is  the  effect  of  the  tariff  with  our  business  in 
different  parts  of  the  world.  In  our  commerce  with  many 
countries  it  produces  an  effect  precisely  opposite  to  that 
claimed  for  it  in  general,  for  it  actually  raises  our  imports 
from  those  countries  far  in  excess  of  our  exports  to 
them. 

The  countries  from  which  our  imports  are  in  excess 
may  be  generally  described  as  those  of  warm  or  torrid 
climate  ;  thus  including  Latin  America  as  far  as  Brazil, 
the  West  and  East  Indies,  and  most  of  Asia.  Japan  is 
included,  and  the  Pacific  South  American  republics  are 
excepted.  The  principal  exports  of  these  countries,  tea 
and  coffee  more  particularly,  along  with  many  tropical 
fruits,  reach  us  free  of  duty ;  for  legislative  wisdom  at 
Washington  has  voted  them  non-competitive — notwith- 
standing that  we  might  raise  our  tea  if  we  wished,  as  suit- 
ably as  sugar  or  flax  or  wool.  On  the  other  hand,  our 
laws  forbid  us  to  enter  into  open  competition  in  providing 
the  things  they  chiefly  want,  by  running  up  the  cost  of 
the  material  worked  on  and  machinery  for  working  it,  as 
well  as  by  refusing  us  permission  to  buy  ships  to  trans- 
port the  finished  product.  We  therefore  sell  to  the 
countries  named  hardly  anything  but  supplies  like  kero- 
sene, virtually  sending  them  to  England  for  the  things 
they  demand.  Our  tariff  laws  have  been  splendidly  suc- 
cessful w^ith  Great  Britain,  Belgium,  the  Netherlands  and 
other  densely-populated,  manufacturing  nations  of  Europe, 
whose  chief  demand  is  food-stuffs  and  raw  materials — for 
we  send  to  those  countries  annually  a  great  many  million 
dollars'  worth  of  merchandise  more  than  we  receive  from 
them  ;  but  in  and  through  that  success  we  resign  to  Eu- 
ropeans most  of  the  trade  of  other  countries.     A  large 


BALANCE   OF    TRADE   AND   CURRENCY  SUPPLY.     53 

and  essential  part  of  our  foreign  commerce  is  now  "  tri- 
angular "  ;  we  send  cotton  and  provisions  to  England  or 
the  Low  Countries  ;  they  send  to  Asia  or  Spanish  America 
the  manufactures  of  iron,  wool,  flax  and  cotton,  which 
form  the  chief  imports  of  these  countries,  and  which  we 
have  almost  completely  protected  ourselves  out  of 
competition  in  providing ;  then  the  last  receivers  close 
the  account,  and  equalize  the  balance,  by  sending  us  the 
luxuries  which  we  have  chosen  for  exemption  from  im- 
port taxation.  It  is  not  denied,  of  course,  that  tariff  laws 
make  very  important  changes  in  the  extent,  the  direction 
and  the  character  of  our  foreign  trade — for  it  is  altogether 
probable  that  much  of  this  "  triangular  exchange  "  would 
become  reciprocal  if  we  made  a  better  adjustment  of 
duties ;  what  is  denied  is  that  such  laws  have  any  power 
to  throw  the  balance  of  trade  in  the  aggregate,  to  one 
side  or  the  other.  That  question,  in  the  case  of  our  own 
country,  the  chart  will  set  at  rest. 

It  has  often  been  proved,  to  the  satisfaction  of  many 
minds,  that  our  tariff  laws  are  no  obstacle  to  our  trade 
with  such  countries  as  Brazil ;  and  the  Nezv  York  Tribune 
recently  sent  out  a  special  correspondent  to  prove  it 
once  more.  The  demonstration  on  which  that  conclusion 
rests,  appears  to  consist  in  elaborately  refuting  a  misstate- 
ment of  our  position.  First,  it  is  shown  by  a  dense  array 
of  figures,  that  80  and  often  90  per  cent,  of  our  importa- 
tions from  those  countries  are  free  of  duty  ;  then  it  is  as- 
serted that  the  free-traders  have  been  complaining  of 
our  duty  on  their  products  as  the  reason  why  we  cannot 
exchange  with  them  ;  and  then,  the  victory  is  an  easy 
one.  But  (i)  the  reasoning  which  it  is  attempted  thus  to 
overthrow  applies  to  Chili  and  the  Argentine — countries 
which  the  Tribune  s  correspondent  did  not  find  time  to 
look    into — and    was    never    meant    for    Brazil.     (2)  The 


54  ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

"  demonstration  "  fails  to  demonstrate,  even  granting  the 
statistics  ;  suppose  for  illustration  that  we  had  a  tariff  ad- 
mitting pigs'  bristles  free,  and  setting  a  500  per-cent.  duty 
on  every  other  product  of  a  certain  country.  It  is  quite 
possible  we  might  import  a  few  dollars'  worth  of  bristles 
from  that  country  every  year,  with  nothing  else,  so  that 
our  tables  would  show  it  as  sending  us  100  per  cent,  of  its 
exports  free.  What  would  in  that  case  be  thought  of  the 
claim  that  our  tariff  was  no  obstacle  ?  The  facts  have 
some  analogy  with  the  illustration,  in  our  dealings  with 
Chili  and  the  Argentine — little  or  none,  of  course,  in 
tropical  countries.  (3)  No  attention  is  ever  paid  in  such 
demonstrations  to  the  effects  of  tariff  laws  mentioned 
in  last  paragraph.  This  is  their  most  important  weakness, 
and  it  is  a  quite  fatal  one. 

COMMERCIAL     DEVELOPMENT    OF    THE     UNITED     STATES    FOR 
SEVENTY    YEARS,  AS   INFLUENCED    BY   IMPORT    DUTIES. 

In  my  own  mind,  the  question  whether  the  nation 
ought  to  increase  the  profits  of  special  industries  by  tax- 
ing general  consumption  and  restricting  the  right  of  pur- 
chase, has  never  depended  for  its  answer  upon  anything 
that  statistical  tables  could  show.  Enough  for  me  that 
one  answer  meant  paternalism,  prescription — the  other 
liberty.  Even  if  my  researches  had  brought  out  only 
those  apparent  proofs  of  greater  material  prosperity  under 
protection,  which  many  less  careful  and  complete  statis- 
tical inquiries  have  exhibited,  my  decision  would  still 
have  been  unshaken ;  for  along  with  the  sleek  pelt  and 
air  of  good  feeding,  I  should  have  discerned,  like  the 
fabled  wolf,  the  mark  of  a  master's  collar,  and  hence  have 
voted  those  blessings  too  dearly  bought.  I  am  happy  to 
be  able  to  show,  however,  that  the  alternative  is  of  no 
such  character — that  a  thorough  study  of  the  figures  and 


BALANCE    OF    TRADE  AND    CURRENCY  SUPPLY.     55 

facts  so  clearly  proves  the  right  policy  to  be  the  best  even 
for  our  material  well-being.  Liberty  deserves  some  sac- 
rifice to  attain  it ;  and  all  the  better  if  we  can  attain  it 
without  sacrifice. 

The  graphical  method  has  considerable  superiority  for 
the  exposition  of  statistical  facts  over  the  tabular.  A 
heavy  bank  of  figures  is  grievously  wearisome  to  the  eye, 
and  the  popular  mind  is  as  incapable  of  drawing  any 
useful  lessons  from  it  as  of  extracting  sunbeams  from 
cucumbers.  It  is  impossible,  moreover,  to  select  the 
really  striking  points  and  omit  the  rest  without  creating 
an  impression  that  the  selection  is  made  with  the  special 
view  of  bringing  out  some  fore-ordained  conclusion  from 
a  mass  which  might  in  its  entirety  lead  to  a  different  one 
— an  impression  that  is,  it  must  be  confessed,  too  often 
justified.  With  the  figures  represented  and  replaced  by 
curves,  as  in  the  chart  at  the  head  of  this  volume,  there 
can  be  entire  confidence  that  all  the  facts  are  before  the 
eye,  and  at  the  same  time  all  needed  facility  in  separating 
those  that  have  an  interest  from  those  that  have  none. 
The  curves  of  this  chart  have  given  me  a  better  idea  of  the 
course  of  the  country's  commercial  development  than  I 
could  have  obtained  from  any  amount  of  inspection  of 
the  data  from  which  they  were  drawn.  I  only  hope  that 
they  will  be  as  full  of  interest  and  instruction  to  other 
inquirers  as  I  have  found  them. 

The  accompanying  tables  contain  the  figures  from 
which  the  chart  was  constructed.  They  were  derived 
from  recent  publications  of  the  U.  S.  Treasury  Depart- 
ment, the  tariff  rates  being  exactly  those  of  the  latest 
Statistical  Abstracts.  These  differ,  usually  by  small 
amounts,  from  the  rates  given  in  SpofforiVs  Americati 
Ahnaiiac :  they  differ  also,  being  for  almost  every  one  of 
the  first  thirty  years  very  much  lower,  from  those  used 


5^  r.COXOMIC  AXn    IXDrSTRTAT.    DF.T.VSrOMS. 

in  Scrib)icrs  Statistical  Atlas.  Professor  Taussig  pub- 
lishes a  table  of  rates  differing  slightly  from  this,  taken 
like  it  and  like  the  others  from  Treasury  data,  and  adds 
the  very,  just  explanation:  "  these  discrepancies  arise  in 
part  from  varying  usage."  The  population  of  the  coun- 
try to  the  nearest  hundred-thousand  inhabitants,  is  given 
according  to  the  interpolations  of  the  late  E.  B.  Elliott. 
Since  Mr.  Elliott  predicted  64^  million  inhabitants  for 
1890,  while  Mr.  Porter's  census  allows  us  but  62|-  mil- 
lions, it  has  been  necessary  to  reduce  his  figures  between 
1880  und  1890;  and  the  result  appears  to  be  that  the 
country  has  been  increasing  by  the  almost  uniform  num- 
ber of  a  million  and  a  quarter  inhabitants  a  year  since 
1874 — an  arithmetical  instead  of  geometrical  progression. 
British  data  for  the  latter  half  of  the  seventy-year  period, 
obtained  from  the  British  "  Statistical  Abstract,"  are  indi- 
cated by  dotted  lines  on  the  chart.  The  publication  fails 
us  on  several  points,  back  of  1856,  and  complete  informa- 
tion for  earlier  dates  would  be  not  very  easy  to  procure. 
In  preparing  this  body  of  facts  for  presentation,  it  was 
believed  advisable  to  make  all  values  independent  of  the 
growth  of  the  country  in  population.  Total  amounts 
were  therefore  divided  by  number  of  inhabitants,  so  as  to 
give  amounts  per  head.  There  is  some  disposition,  I  am 
well  aware,  to  credit  our  customs  legislation  with  most  of 
our  increase  in  population  ;  which  amounts  to  asserting 
that  but  for  a  high  tariff  our  national  area  would  never 
have  exceeded  a  million  square  miles,  or  our  great  rivers 
have  flowed  through  fruitful  valleys.  In  this  inquiry,  it 
appears  nevertheless  most  satisfactory  to  consider  the 
tariff  in  its  relations  to  the  unit  of  population  rather  than 
of  area.  It  interests  us  more  to  see  the  activities  of  the 
individual  citizen — how  much  he  exports,  how  much 
specie  he  acquires  or  parts  with,  what  part  of  a  ton  of 


-      BALANCE   OF    TRADE  AND    CURRENCY   SUPPLY.     57 

shipping  he   owns   on   the   average,   than   to  learn   these 
facts  regarding  a  continually  varying  number  of  citizens. 

Not  until  1 82 1  do  the  Treasury  Reports  distinguish 
between  merchandise  and  specie  in  their  account  of  im- 
ports and  exports.  The  commercial  development  of  the 
country  through  the  period  of  embargo,  the  War  of  18 12 
and  the  financial  distress  which  followed,  presents  many 
points  of  interest  to  the  student  of  our  history  ;  but  the 
fact  that  the  principal  peculiarities  of  that  period  are  not 
in  the  smallest  degree  likely  ever  to  be  reproduced  in 
this  country  makes  me  less  regretful  than  I  should  other- 
wise be  that  the  curves  showing  "  exported  merchandise," 
"  merchandise  balance,"  and  "  rate  of  duty  on  dutiable 
imports"  cannot  be  continued  back  of  1821.  The  volume 
of  our  total  exports  in  the  two  years  1806  and  1807 
exceeded  a  hundred  million  dollars'  worth,  a  sum  not 
again  surpassed  until  1834;  this  was  over  $16  per  capita, 
an  amount  equalled  in  only  two  years  of  our  subsequent 
history.  Large  as  were  the  exports  of  those  years,  the 
imports  considerably  exceeded  them  ;  and  the  same  was 
true  in  still  greater  degree  on  the  revival  of  our  foreign 
commerce,  181 5  to  1818.  Returns  of  total  value  of 
imports  are  very  loosely  given  before  1821,  but  they 
certainly  show  a  decided  change  in  that  total  between 
1818  and  1819.  The  attempt  has  been  made  to  connect 
the  great  volume  of  importations  for  those  four  years, 
with  a  reduction  of  duties  which  followed  the  war ;  but 
there  are  two  facts  which  the  Treasury  tables,  if  trust- 
worthy, clearly  prove.  First,  the  importations  increased 
before  any  reduction  took  place  ;  for  they  sprang  up  to 
113  millions  in  1815,  while  the  import-duty  was  33.7  per 
cent.,  the  highest  figure  reached  from  the  beginning  of 
our  Constitutional  government  until  1824.  Secondly, 
the  average  duty  for  the  next  three  years,  18 16-18 18,  was 


58        ECONo^rIC  AiVD  jxdustrial  nKi.nsroA^s. 

UNITED  STATES. 


J.  A 

U 

Merchant  Marine   in 

Rate  of  Duty  on 

^1 

&-^ 

0    P,« 

0  as: 
a  u  — 

d 

0! 

-a  S 

d 

V 

.=1 

II 

S-0 

X  V'o 

W-oQ 

11 

u   0 

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"  2 

3  u 

a  ^ 

(21 

Ip 

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W  E  3 

X  do. 
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0  u 

fa  0. 

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9.9 

5 -50 

0.00 

E0.24 

O.131 

0.062 

0.060 

36.0 

34-6 

IS22 

10.2 

6.02 

I    1. 81 

E0.72 

0.129 

0.061 

0.057 

31.7 

30.2 

1823 

10.5 

6.50 

I  0.40 

E0.I2 

0.128 

0.059 

0.057 

32.7 

30.9 

1824 

10.8 

6.39 

I  0.30 

I   0.13 

0.129 

0.059 

0.059 

37-5 

35-4 

1825 

II  .1 

8.17 

E  0.04 

E  0.24 

0.128 

0.058 

0.060 

37-1 

35.1 

1826 

II-5 

6-34 

I  0.45 

I  0. 19 

O.I33 

0.063 

0.061 

36.1 

33.4 

1827 

II. 8 

6.30 

E  0.26 

I  0.02 

0.137 

0.067 

0.059 

41.4 

39-2 

1828 

12. 1 

5-29 

I  1.40 

E  0.06 

0  144 

0.070 

0.063 

39-4 

37.0 

1829 

12.5 

5-39 

E  0.02 

I  0.20 

O.IOI 

0  041 

0.047 

44.3 

41.4 

1830 

12.9 

5.56 

E  0.70 

I  0.47 

0.092 

0.040 

0.042 

48.9 

45-3 

I83I 

13-2 

5-48 

I  1.79 

E0.13 

0.096 

0.041 

0.041 

40.8 

38.2 

1832 

13-6 

5-99 

I  1. 00 

I   O.OI 

0.106 

0.048 

0.045 

33-8 

30.9 

1833 

14.0 

6.25 

I  0.96 

I  0.32 

0 .  II 5 

0.053 

0.046 

32.0 

24.0 

1834 

14.4 

7.10 

I  0.44 

I  no 

0.122 

0.054 

0.052 

32.7 

17.5 

1835 

14.8 

7.78 

I  1.46 

I  0.45 

0.123 

0.054 

0.053 

36.0 

19.0 

1836 

15-2 

8.18 

I  3-44 

I  0.60 

0.124 

0.057 

0.050 

31.6 

17.6 

1837 

15-7 

7.10 

I  1. 21 

I  0.29 

0. 121 

0.061 

0.044 

25.4 

13.9 

1838 

16. 1 

6.52 

E0.56 

I  0.88 

0.124 

0.065 

0.044 

37-8 

20.8 

1839 

16.6 

6.77 

I  2.66 

E  0.19 

0.127 

0.069 

0.042 

29.9 

16.4 

1840 

17. 1 

7-23 

E  1.48 

I  0.03 

0.127 

0.069 

0.045 

30.4 

15-4 

I84I 

17.6 

6.35 

I  0.64 

E0.28 

0.121 

0.063 

0.045 

32.2 

16.2 

1842 

18. 1 

5-52 

E  0.21 

E  0.04 

0.115 

0.05S 

0.045 

24.0 

17.4 

1843 

18.7 

4-43* 

E2.16* 

I   1. 11' 

0.116 

0.058 

0.046 

25.7 

17-7 

1844 

19-3 

5-48 

E  0.16 

I  0.02 

0.118 

0.057 

0.047 

35.1 

28.6 

1845 

19.9 

5-33 

I  0.36 

E  0.23 

0.122 

0.061 

0.045 

32.6 

27.4 

1846 

20.5 

5-35 

I  0.40 

0.00 

0.125 

0.064 

0.046 

31-4 

25.8 

1847 

21. 1 

7  43 

E  1.63 

I  1.05 

0.135 

0.071 

0.050 

26.9 

23.0 

1848 

21.8 

6.34 

I  0.48 

E0.43 

0.144 

0.076 

0.054 

25.0 

22.2 

1849 

22.5 

6.24 

I  0.04 

I  0.06 

0.148 

0.079 

0.056 

24.7 

22.0 

1850 

23.2 

6.22 

I  1.26 

E0.13 

0.153 

0  077 

0.062 

25.8 

23.2 

I85I 

24.0 

7-87 

I  0.91 

E  i.oo 

0.157 

0.079 

0.064 

25.4 

23.1 

1852 

24.8 

6.73 

I  1.63 

E  1. 51 

0.167 

0.083 

0.069 

26.0 

22.9 

1853 

25.6 

7-95 

I  2.35 

E  0.91 

0.172 

0.083 

0.075 

25.9 

23.4 

1854 

26.4 

8.98 

I  2.29 

E  1.30 

0.182 

0.088 

o-.o8i 

25.6 

23.5 

1855 

27-3 

8.02 

I  1.42 

E  1.92 

0.191 

0.093 

0.086 

26. 8 

23.4 

*  For  nine  months  only.  For  a  year  at  same  rate  :  exports,  $5.91  ;  excess 
of  exports,  mdse.,|;2.88  ;  excess  of  imports,  specie,  $1.48.  These  values  used 
in  the  calculations  ;  both  sets  plotted  on  the  charts. 


BALANCE    OF    TRADE   AND    CURRENCY   SUPPLY.      59 
UNITED  STATES  (Continued). 


,    . 

u 

u 

Merchant  Marine  in 

Rate  of  Duty  on 

% 

0  0.2 

*<  S!  0 

0  0.2 
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1856 

28.1 

10. or 

I  1.04 

E  1.48 

0.173 

0.080 

0.082 

26.0 

21.7 

1857 

28.9 

10.17 

I  1.89 

E  1.96 

O.171 

0.080 

0.078 

22.4 

19. 1 

1858 

29.8 

9-13 

E  0.29 

E  1. 12 

0.169 

0.081 

0.077 

22.4 

17.3 

1S59 

30.6 

9-57 

I  1.26 

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0.168 

0.081 

0.076 

19.6 

15.4 

i860 

31-4 

10.62 

I  0.64 

E  1.85 

0.170 

0.084 

0.076 

19.7 

15  7 

1861 

32.1 

6.84 

I  2.17 

I  0.52 

0.173 

0.084 

0.078 

18.8 

14.2 

1862 

32.7 

5.83 

E  0.04 

E0.63 

0.156 

0.080 

0.066 

36.2 

26.1 

1863 

33-4 

6. II 

I  1. 18 

E  1.63 

0.154 

0.089 

0.058 

32.6 

28.3 

1864 

34-0 

4.67 

I  4.64 

E  2.72 

0.147 

0.095 

0.044 

36.7 

-^2.0 

1865 

34-7 

4-79 

I  2.09 

E  1.66 

0-147 

0.097 

0.044 

47-6 

38.5 

1866 

35-5 

9-83 

I  2.42 

E  2.12 

0.122 

0.077 

0.039 

48.3 

41.8 

1867 

36.2 

8.13 

I  2.80 

E  1.07 

0.II9 

0.076 

0.042 

46.7 

44-6 

1868 

37-0 

7.62 

I  2.04 

E  2.15 

O.I18 

0.073 

0.040 

48.6 

46-5 

1869 

37-8 

7-57 

I  3-48 

E  0.99 

O.IIO 

0.067 

0.040 

47.2 

44.6 

1870 

38.6 

10. i3 

I  1. 12 

E0.82 

O.IIO 

0.068 

0.038 

47.1 

42.2 

iSyi 

3'; -6 

II. 18 

I  1.96 

E1.95 

0.108 

0.070 

0.034 

44-0 

38-9 

1872 

40.6 

10.94 

I  4.49 

E  1.63 

0. 109 

0.072 

0.033 

41.4 

37-0 

1863 

41.7 

12.53 

I  2.87 

E  1. 51 

0.II3 

0.076 

0.033 

38.1 

27.0 

1874 

42.8 

13-70 

E0.44 

Eo  89 

O.II2 

0.077 

0.032 

38.5 

26.9 

1875 

44.0 

11.67 

I  0.44 

E  1.62 

O.IIO 

0.073 

0.034 

40.6 

28.2 

1876 

45-1 

11.98 

E  1.76 

E  0.90 

0.095 

0.058 

0.034 

44-7 

30.2 

1877 

46.4 

12.99 

E3.26 

E0.33 

0.091 

0.055 

0.034 

42.9 

26.7 

1878 

47.6 

14.60 

E5.42 

E  0.08 

O.0S8 

0.050 

0.033 

42.8 

27.1 

1879 

48.9 

14-53 

E  5. 41 

E  o.io 

0.085 

0.053 

0.030 

44-9 

29.0 

1880 

50.2 

16.65 

E3-34 

I  I-51 

0.081 

0.053 

0.026 

43-5 

29  I 

1881 

51-5 

17-52 

E  5.04 

I  1.77 

0.079 

0.051 

0.025 

43-2 

29.8 

1882 

52.7 

14.24 

E  0.49 

E0.13 

0.079 

0.053 

0.024 

42.7 

30.1 

1883 

54-0 

15.26 

E  1.87 

E  0.06 

0.078 

0.053 

0.024 

42.4 

29.9 

1884 

55-3 

13-39 

E  1.32 

E0.54 

0.077 

0.052 

0.023 

41.6 

28.4 

1885 

56.5 

13-14 

E  2.92 

I  0.02 

0.076 

0.051 

0.022 

45-9 

30.6 

1886 

57.8 

"•75 

E  0.76 

E0.59 

0.071 

0.051 

0.019 

45-6 

30.1 

1887 

59-0 

12.14 

E  0.41 

I  0.41 

0.070 

0.050 

0.017 

47-1 

31.0 

1888 

60.2 

11.56 

I  0.47 

I  0.21 

0.070 

0-053 

0.015 

45-6 

30.0 

1889 

61.4 

12.07 

I  0.04 

E  i.io 

0.070 

0.052 

0.016 

45-1 

29.5 

i8go 

62.6 

13-68 

E  1.09 

E  0.29 

0.071 

0.054 

0.015 

44.4 

29.2 

6o        kcojVOmic  and  industrial  delusions. 

GREAT  BRITAIN. 


u 

... 

u 

> 

c  n 

CL*0 

S     Q 

Kxcess 
Mdse.    pe 
—  Dollars. 

ess  Exp.  or 
Specie  pe 
—  Dollars 

^  rt  0 

Ml 

Q      *> 

'a'"' 

«  »i  1 

0    -  ..: 

b    -  Q. 

rt  ^    1 

0  0 

u 

s.h" 

«gl 

P^t^ 

" 

1856 

28.0 

24.20 

5-79 

* 

0.156 

13-6 

1857 

28.2 

25.23 

7.19 

* 

0.162 

12 

5 

1858 

28.4 

23-95 

4.25 

I  1.69 

0.164 

14 

6 

1859 

28.6 

26.49 

4.00 

I  0.23 

o.i6'3 

13 

6 

i860 

28.8 

27.80 

7.78 

E0.43 

0.162 

II 

0 

i86i 

29.0 

26.79 

9-71 

E0.34 

0.166 

10 

9 

1862 

29.2 

27.70 

9-92 

I  0.39 

o.i6g 

10 

7 

1863 

29.4 

32.59 

8.61 

I  0.58 

o.i8i 

9 

3 

1864 

29.6 

34-96 

10.25 

I  0.76 

0.190 

8 

2 

1865 

29.9 

35.62 

8.50 

I  1.04 

0.193 

7 

9 

1S66 

30.1 

38.63 

9. II 

I  2.05 

0.192 

7 

6 

1867 

30.3 

36.27 

7-93 

I  1.52 

0.190 

8 

2 

1868 

30.6 

36.23 

10.64 

I  0.74 

0.189 

7 

6 

1869 

30.9 

37-33 

9.20 

I  0.65 

0.185 

7 

3 

1870 

31.2 

38-07 

9-23 

I  1.64 

0.182 

6 

7 

1871 

31-5 

43-81 

7-33 

I  0.6S 

0.181 

6 

I 

1872 

31-9 

47-99 

6.12 

Eo.ii 

0.180 

5 

9 

1873 

32.2 

47.00 

9. II 

I  0.71 

0.180 

5 

5 

1874 

32.5 

44-57 

10. 85 

I  1. 12 

0.184 

5 

2 

1875 

32.8 

41.73 

13.70 

I  0.83 

0.187 

5 

4 

1876 

33-2 

37-64 

17-35 

I  I. II 

0.189 

5 

3 

1877 

33-6 

36.55 

20.58 

E  0.38 

0  190 

5 

I 

1878 

33-9 

35-24 

17.70 

I  0.82 

0.194 

5 

5 

1879 

34-3 

35-30 

16.20 

E0.63 

0.192 

5 

3 

1880 

34-6 

40.29 

17.56 

E0.37 

0.190 

4 

7 

1881 

35-0 

41-31 

13.90 

E  0.78 

0.191 

4 

9 

1882 

35-3 

42.28 

14.66 

I  0.36 

0.197 

4 

8 

1883 

35-6 

41.76 

16.60 

I   O.II 

0.203 

4 

6 

1884 

36.0 

40.01 

12.71 

E  0.22 

0.206 

5 

3 

1885 

36.3 

36.39 

13-35 

I  0.03 

0.205 

5 

3 

1886 

36.7 

35-63 

10.77 

E0.08 

0.201 

5 

8 

1887 

37-1 

36-83 

10.69 

I  0.08 

0.198 

5 

4 

i883 

37-4 

38.76 

11.68 

E  0.07 

0.199 

5 

2 

1889 

37.8 

40.52 

14-54 

I  0.25 

0.205 

4.8 

*  Specie  imports  not  reported  in  British  "  Statistical  Abstract." 
Ratio  used  in  conversion,  £\  =  4^|  dollars. 
Population  excludes  army,  navy,  and  merchant-seamen. 


BALANCE   OF    TRADE  A. YD    CURRENCY  SUPPLY.     6 1 

22.0  per  cent.,  by  the  same  tables ;  a  higher  rate  than  for 
any  three  successive  years  before  1812.  The  tabular 
rates  of  duty  are  on  total  importations,  and  are  therefore 
lower  than  had  merchandise  alone  been  considered. 

DESCRIPTION    OF    THE    CHART— TARIFF    RATES. 

The  years  run  horizontally,  and  are  numbered  at  top 
and  bottom  ;  corresponding  values  run  vertically.  The 
lines  denoting  rate  of  duties  are  two  near  the  bottom, 
shaded  to  distinguish  them  from  the  foreign-trade  ship- 
ping line,  which  crosses  them  in  a  few  places.  The  lowest 
line  represents  the  rate  of  duty  as  obtained  by  dividing 
the  total  value  of  imported  merchandise  into  the  total 
customs-receipts  ;  for  the  one  just  above  it,  running  nearly 
parallel,  the  divisor  is  the  value  of  all  dutiable  imported 
merchandise.  The  zero  for  these  is  the  bottom  line.  The 
proportion  of  dutiable  to  free  importations  at  any  time  is 
seen  in  comparing  the  height  of  the  lower  line  with  the 
distance  between  the  two  ;  it  thus  appears  that  the  pro- 
portion of  free  importations  was  very  small  until  1833, 
and  was  not  very  large  from  1844  to  1872,  while  under 
the  Compromise  Tariff,  1833  to  '43,  and  again  after  1872, 
it  became  considerable.  For  a  few  years,  about  1840, 
nearly  half  the  importations  were  free.  The  proportion 
has  been  of  late  years  not  far  from  one-third  ;  but  the 
McKinley  law  will  largely  increase  it,  by  its  policy  of 
removing  the  duties  from  sugar  and  piling  them  up  on 
the  products  of  Republican  States. 

I  am  not  able  to  show  any  effect  upon  our  commercial 
development,  arising  from  increase  or  decrease  in  the 
proportion  of  free  importations,  the  data  being  too  scanty. 
I  therefore  furnish  both  percentages,  admitting  no  case  of 
a  rise  or  fall  in  rate  of  duty  except  where  the  two  agree, 
and  setting  down  as  doubtful  the  cases   in  which  there 


62         KcoiYOAnc  Axn  ixncsTRiAi.  />/■:/. rs/oys. 

appears  to  be  a  rise  by  the  one  reckoning  and  a  fall  by 
the  other.  I  have  no  preference  to  express,  between 
these  two  ways  of  reckoning  the  duty  ;  for  neither  is  at 
all  satisfactory.  I  have  already  pointed  out  the  absurdity 
into  which  the  first  way  leads,  by  supposing  a  case  in 
which  bristles  are  admitted  free  and  a  prohibitive  duty 
put  on  every  thing  else.  Suppose  on  the  other  hand  that 
every  thing  else  comes  in  free,  while  bristles  have  to  pay 
a  duty,  high  enough  to  just  escape  being  prohibitive. 
Our  scanty  importations  of  that  article  might  show  a  high 
ratio  of  duties  to  dutiable  imports,  while  we  Were  in  fact 
enjoying  practical  free  trade.  This  way  is  therefore  no 
surer  than  the  other.  Neither  way,  indeed,  can  tell  us 
what  it  most  concerns  us  to  know :  the  intensity  of  the 
regulative  effect  exerted  by  tariff  taxes,  or  the  burden 
thrown  by  them  on  the  productive  industry  of  the  coun- 
try. Neither  is  free  from  the  grave  fault  of  considering 
what  is  actually  imported,  and  not  what  we  are  prevented 
by  the  action  of  the  law  from  importing,  in  making  up  its 
average.  In  importations  prevented  are  the  regulative 
effect  and  the  burden  most  felt,  and  of  those  the  tabular 
rates  and  the  curves  here  drawn  can  take  no  account.  I 
therefore  prefer  not  to  rely  on  either  of  them  as  indicating 
precisely  how  heavy  a  burden  the  tariff  really  is,  or  to  lay 
any  stress  on  comparison  of  rates  and  commercial  devel- 
opment between  years  far  apart ;  but  to  confine  myself  to 
estimates  of  the  effects  of  raising  or  lowering  the  duty  as 
manifested  in  short  periods.  For  that  purpose  the  curves 
will  sufifice  ;  for  they  tell  us  accurately  enough  whether 
the  tendency  of  duties  is  upward  or  downward. 

The  British  ratio  of  customs  to  total  imports  shows  a 
slow  and  nearly  steady  diminution  between  1856  and 
1873,  afterward  remaining  practically  constant  at  a  little 
over  five  per  cent. 


BALANCE    OF    TRADE   AND    CURRENCY  SUPPLY.     63 

The  four  irregular  lines  above  those  just  described, 
relate  to  the  merchant-marine  of  the  United  States. 
They  may  be  postponed  for  the  present,  as  that  branch 
of  the  subject  is  to  come  up  in  the  fifth  chapter. 

DESCRIPTION  OF  THE  CHART EXPORTS  AND  BALANCE   OF 

TRADE. 

The  growth  of  commerce  in  the  United  States,  per 
head  of  population,  is  shown  in  the  lines  near  the  top. 
Exports  are  counted  upward,  from  a  zero-line  distin- 
guished by  being  drawn  heavier  ;  the  per-capita  value  of 
these  seems  to  undergo  little  progressive  change  until 
1850;  to  increase  from  that  date  till  1 880,  except  for  a 
huge  falling  off  at  the  time  of  the  Civil  War ;  and  to 
decline  somewhat  after  1880.  The  corresponding  British 
values,  of  exported  merchandise  per  head,  would  extend 
the  chart  too  far  ;  they  are  therefore  replaced  by  half- 
values.  It  will  be  seen  that  for  every  year  since  1855  the 
British  line  is  higher  than  that  for  our  country  ;  there  was 
not  a  year,  therefore,  when  they  failed  to  export  more 
than  double  our  value  of  merchandise.  The  British  curve 
rises  pretty  steadily  till  1872;  then  declines  to  a  mean 
value  of  $39 — represented  on  the  chart  a  little  below  $20 
— about  which  it  oscillates. 

Imports  per  capita  are  not  directly  shown ;  they  can  be 
inferred,  however,  as  the  space  between  the  export-line 
and  that  showing  the  trade-balance  answers,  of  course,  to 
the  volume  of  imports.  The  merchandise  balance  of 
trade  is  of  more  interest  in  this  inquiry ;  it  is  shown  in  a 
heavy  line,  above  the  zero  for  an  excess  of  exports  and 
below  for  one  of  imports.  The  fainter  line  which  accom- 
panies it,  shows  the  total  per-capita  balance  ;  account  being 
taken  of  movements  of  specie  in  the  space  between  the 
two.    When  an  excess  of  coin  and   bullion   is  exported. 


64  ECONOMIC  AA'P    IXDIJSTRIAI.    DKLUSIOXS. 

the  fainter  line  is  above ;  when  imported,  below.  The 
two  Hncs  are  often  not  distinguishable,  the  net  transfer  of 
specie  being  very  small.  The  only  points  where  this 
curve  shows  any  specially  noteworthy  features  are  :  (i) 
An  excess  of  imported  specie  for  seven  years  uninter- 
rupted, 1832  to  1838.  This  is  not  in  settlement  of  a 
balance  of  trade,  for  there  is  a  like  uninterrupted  suc- 
cession of  excesses  of  imported  merchandise,  1831  to  1837, 
and  the  chart  shows  no  way  in  which  to  account  for  it.  (2) 
Thirty  successive  years,  1850  to  1879,  show  large  excesses 
of  exported  specie;  there  is  but  one  break,  in  1861.  Up 
to  1863,  this  excess  practically  neutralizes  the  excess  of 
imported  merchandise,  and  should  be  interpreted  as  evi- 
dence that  we  were  simply  finding  a  healthy  and  advan- 
tageous market  for  one  of  our  surplus  products,  gold. 
After  1863,  the  gold  export  excess,  though  at  first  greatly 
increased  in  volume,  fails  to  pay  for  our  excess  of  in\- 
ported  merchandise  until  1874:  in  the  intervening  ten 
years  we  are  evidently  incurring  debts,  which  afterward 
require  large  export  excesses  to  settle.  (3)  The  import 
excess  for  the  years  1880  and  1881  is  noteworthy.  This  is 
probably  an  effect  of  the  accumulation  of  a  large  fund  in 
our  Treasury,  to  sustain  specie  resumption. 

Returning  to  the  consideration  of  the  heavier,  or  mer- 
chandise-balance curve,  we  have  to  remark  its  usual 
preference  for  a  position  below  the  zero-line,  and  its  long 
periods  of  generally  downward  tendency,  alternating 
with  shorter  periods  when  it  turns  upward.  For  instance, 
its  general  direction  is  downward  from  1825  to  1836,  from 
1843  to  1853,  from  1858  to  1872,  and  since  1878  ;  upward 
until  1825,  from  1836  to  1843,  from  1853  to  1858,  and 
from  1872  to  1878.  The  time  included  in  the  former  four 
periods  is  twice  as  long  as  in  the  latter  four.  The  con- 
nection  of  our  great  panic    years    1837   and    1873,    "^vith 


BALANCE   OF    TRADE  AND    CURRENCY  SUPPLY.     65 

two  of  the  turning  points  from  down  to  up,  is  very  ob- 
servable ;  but  the  intervening  panic  year,  1857,  is  not  so 
plainly  represented.  The  upward  turn  between  1853  and 
'58  appears  to  have  come  too  early  for  it  ;  but  that  turn 
is  after  all  so  feebly  marked  that  it  might  almost  have 
been  neglected,  and  the  whole  period,  1843  to  1872, 
treated  as  one  of  general  downward  tendency.  The 
fact  is  certainly  an  interesting  one,  that  the  process  of 
contraction  of  our  foreign  purchases  is  so  much  more 
abrupt  than  that  of  expansion. 

The  British  balance-of-trade,  shown  in  the  dotted 
curve,  is  very  interesting.  During  the  whole  thirty-five 
■years  it  has  been  what  we  are  taught  to  call  "  adverse," 
on  the  whole  increasingly  so  ;  though  the  increase  was 
most  strongly  shown  between  1872  and  1877,  about  the 
time  our  own  balance  was  turning  the  other  way.  This 
excess  of  imports  per  capita — more  than  double  what  we 
could  show  for  every  year  but  one — greatly  diminished  after 
1877,  but  it  seems  now  to  be  increasing  again.  Will  it 
be  thought  strange  that  there  is  no  export-balance  of 
specie  to  meet  this  huge  import-balance  of  goods  ?  The 
British,  from  the  year  1858,  with  which  the  finer  dotted 
line  starts  out,  actually  imported  a  decided  excess  of  spe- 
cie almost  every  year  until  1 878  ;  there  was  then  a  small 
balance  in  the  other  direction,  but  that  soon  disappeared. 
Where  is  a  trace  to  be  seen  of  the  frightful  effects 
assumed  to  follow  an  "  unfavorable  "  balance  of  trade  ? 
Who  can  show  wherein  that  busy  and  increasingly  wealthy 
country  has  suffered  in  the  least  from  such  a  balance  ? 

EFFECT     OF     THE     TARIFF    ON    OUR    COMMERCE INSTANCES    OF 

MISLEADING    TESTS. 

Fairly  and  satisfactorily  to   determine  what  influence  is 
exerted  by  a  state,  or  change  in  the  rate  of  import  duties 

5 


^6  F.C(hV()A//(-  .I.V/)   INDUSyjaAf.    />/■:/.  fS/O.VS. 

on  the  biilancc  of  trade  and  on  tlic  volume  of  exported 
merchandise,  we  ought  to  decide  beforehand  on  some 
rule  or  criterion  by  which  we  are  to  infer  influence  ;  for 
the  same  series  of  facts  often  wears  one  aspect  to  one 
observer,  and  a  very  different  one  to  another.  An  exam- 
ple is  suggested  by  the  export-curve  of  this  chart.  The 
feature  of  it  that  will  first  attract  many  eyes,  is  that  its 
highest  point  is  attained  in  i88i,  during  the  prevalence 
of  high  duties,  which  leads  at  once  to  the  inference  that 
high  duties  are  favorable  to  export  business.  But  let  us 
see  how  the  matter  appears  under  more  careful  study. 

The  general  direction  of  the  export  curve  for  the 
whole  seventy  years  is  upward,  even  though  the  increase 
of  population  has  been  allowed  for  ;  we  continue  to  ex- 
port, that  is  to  say,  an  increasing  value  of  merchandise 
per  head  of  population.  This  increase  does  not  fairly 
begin  until  1850  ;  and  the  fact  that  it  is  shown  alike  under 
the  low  duties  of  date  and  (for  a  time,  at  least),  under  the 
very  high  duties  prevailing  after  the  Civil  War,  leads 
the  impartial  inquirer  to  search  for  its  cause  in  some  con- 
dition independent  of  tariff  laws.  The  growth  of  our 
export  business,  in  the  fifteen  years  following  the  war, 
is  not  unfrequently  ascribed  to  the  stimulating  effect  of 
protection  on  our  productive  industries  ;  but  the  chart 
forbids  us  this  explanation,  for  to  entertain  it  we  must 
leave  out  of  view  three  facts  :  Jirst,  that  the  falling  off 
from  1 88 1  to  1889,  with  high  duties,  was  as  marked  as 
the  advance  up  to  1881  ;  second,  that  the  British  export 
business  for  many  years  at  about  the  same  time,  in  the 
face  of  a  constantly  diminishing  percentage  of  import 
duties,  increased  even  more  rapidly  ;  third,  that  our  own 
increase  was  as  marked  from  1846  to  1861  when  our 
tariff  was  lowest.  There  can  be  very  little  question 
that  our   foreign  trade    gained  this  noteworthy  increase 


BALANCE    OF    TRADE   AND    CURRENCY   SUPPLY.     6'J 

per  capita  simply  by  becoming  less  costly  ;  for  the  in- 
crease began  with  the  introduction  of  iron  steamships, 
and  other  improvements  in  economical  transportation 
attended  its  continuance.  Vessels  became  larger  and 
stouter ;  their  passages  swifter.  We  need  look  no  further 
for  an  explanation  of  the  general  upward  direction  of 
our  export  curve  between  1850  and  1880  than  to  cheaper 
ocean  carriage.  Intelligent  Protectionists  do  occasionally 
exist — the  expression  is  not  quite  a  contradiction  in 
terms — and  I  feel  sure  that  all  such  will  admit  that  this 
economy  in  ocean  transportation  has  really  been  attained, 
and  that  it  is  also  adapted  to  promote  international  ex- 
changes. But  when  this  is  admitted  no  certainty  remains 
that  protection  has  had  any  stimulating  effect  at  all,  and 
we  have  found  only  another  illustration  of  the  danger  of 
trusting  too  confidently  to  isolated  facts.  We  are  secure 
only  when  we  can  discover  a  group  of  facts  which  point 
in  the  same  general  direction.  The  case  of  one  high 
point  of  the  export-curve,  reached  under  high  duties,  is 
of  very  little  value  unless  we  can  show  either  that  noth- 
ing else  was  at  work  that  could  lead  to  such  a  result,  or 
else  that  the  general  effect  of  raising  our  import  duties — 
a  thing  that  we  have  done  a  good  many  times — has  been 
to  stimulate  exportation. 

The  importance  of  the  inquiry  we  are  now  making  is 
sufificient  to  justify  a  little  further  attention  to  the  method 
that  I  believe  to  be  erroneous,  although  often  employed, 
before  suggesting  a  better  method  of  extracting  from 
these  data  the  instruction  that  they  contain.  Suppose  we 
are  trying  to  test  the  truth  of  the  alleged  connection  be- 
tween high  duties  and  "  favorable "  balance  of  trade. 
Such  a  balance  has  prevailed  for  the  greater  part  of  the 
last  fifteen  years,  and  most  Protectionists  are  agreed  in 
ascribing  it  to  the  high  tariff.     Hon.  Mr.  McKinley,  for 


6R  F.COXOMfC  AXn   IXDUSTRIAI.    /)/■/.  I ' S/O.VS. 

instance,  is  invariably  quite  positive  that  the  relation  is 
one  of  cause  and  effect.  To  make  that  out,  he  skips 
airily  from  the  period  before  the  war  to  1876,  and  conceals 
the  fact  so  clearly  shown  in  the  chart,  that  the  balance 
"  against  us  "  before  the  war  was  greatly  increased  under 
the  enormous  war  duties.  The  very  years  1864  to  1872, 
during  every  one  of  which  the  duties,  compared  with 
total  importations,  were  higher  than  they  have  since  been, 
showed  the  heaviest  unfavorable  balance  that  we  have 
ever  known,  turning  only  after  the  rates  had^been  some- 
what reduced.  He  conceals  also  a  fact  as  plain  :  that  the 
balance  has  grown  very  much  less  favorable  since  1881, 
though  the  duties  have  become  on  the  whole  heavier.  I 
doubt  if  an  argument  from  Mr.  McKinley  would  be 
recognizable  if  it  contained  no  distortion  or  suppression  of 
facts.  But  this  is  a  digression.  To  show  whether  high 
duties  had  any  effect  in  giving  us  a  favorable  balance, 
I  counted  the  number  of  instances  of  such  a  balance  in 
the  seventy  years.  There  are  twenty-six,  with  forty-three 
adverse,  and  one  zero.  There  are  just  twenty-six  years 
when  the  duty-rate  on  total  importations  is  as  high  as 
thirty  per  cent.,  among  these  sixty-nine,  and  forty-three 
when  lower.  The  number  of  instances  when  the  high 
duty  corresponds  with  the  favorable  balance  is  seen  to  be 
nine ;  an  exactly  even-chance  distribution  would  give  us 
ten.  Considering  now  the  rate  as  compared  with  dutiable 
imports,  and  treating  all  rates  above  forty  per  cent,  as 
high,  we  do  find  an  apparent  connection  between  high 
rates  and  "  favorable  "  balance,  for  twenty-eight  years  of 
high  duty  give  us  sixteen  such  coincidences,  where  an 
e.xactly  even  chance  would  give  but  ten  and  a  half.  Does 
that  fact  have  weight  with  any  one?  Then  let  him  con- 
fine his  attention  to  the  twenty-five  years  since  the  war 
closed  in  1865,  of  which  fourteen  show  a  favorable  balance. 


BALANCE   OF   TRADE  AND   CURRENCY  SUPPLY.     69 

Here,  the  general  range  of  duties  being  higher,  we  should 
properly  set  our  limit  at  forty-five  per  cent.  There  are 
thus  ten  years  of  high  duty  on  dutiable  imports,  and  of 
these  only  three  show  a  favorable  balance ;  an  even 
chance  would  give  six.  If  these  facts  led  to  any  con- 
clusion at  all,  it  would  naturally  be  that  the  so-called 
"  favorable  balance  "  required  moderately  high  duties,  but 
was  incompatible  with  a  v^ery  high  scale.  But  it  is  not 
probable  that  any  rational  person  would  accept  a  con- 
clusion of  that  kind.  It  is  much  more  reasonable  to  con- 
clude that  this  test  does  not  really  prove  any  connection 
at  all  between  the  two  orders  of  facts.  Moreover,  for 
reasons  already  stated,  little  dependence  can  be  placed 
upon  any  inference  from  such  a  test.  I  have  now  to  set 
forth  another,  which  I  believe  far  more  satisfactory. 

A    BETTER    TEST    OF    THE    TARIFF    EFFECT. 

There  is  evidently  less  risk  of  confusion  between  the 
effect  of  other  circumstances  and  that  of  the  cause  we 
investigate,  when  we  attend  to  the  action  of  the  latter 
through  short  periods  of  time  ;  and  particularly  when  we 
are  able  to  study  the  effects  of  opposite  changes  in  it, 
under  nearly  the  same  circumstances  otherwise.  In  few 
words,  we  may  be  deceived  in  comparing  high  and  low 
duties  at  periods  wide  apart,  when  we  would  not  be 
deceived  in  observing  the  transition  of  the  one  to  the 
other  and  back  again,  in  a  space  of  time  when  other  causes 
may  be  reasonably  supposed  uniform.  Let  us  put  our 
question  in  this  form  :  What  effect  upon  commerce  is  to  be 
expected  within  a  few  years,  after  a  change  in  the  tariff  ? 

Desiring  to  make  the  interval  as  short  as  possible,  I 
have  fixed  it  at  two  years  only ;  setting  down  opposite 
each  year  from  1822  to  1889  the  difference  of  the 
year  following   from  the  year  preceding,  in  rate  of  duty 


70  ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

according  to  both  reckonings,  in  merchandise-balance 
per  capita,  and  in  value  of  exported  merchandise  per 
capita;  denoting  by  the  sign  +  increases  in  duty  or  in 
exports,  or  decreases  in  an  import  balance,  and  by  the 
sign  —  changes  in  the  opposite  direction.  Thus  for  1822 
the  record  is:  Exported  Mdse.  -|-  $1.00,  Mdse.  Balance 
—  $0.40,  Duty  on  Dutiable  Mdse.  —  3.3  per  cent.,  on 
Total  Mdse.  —  3.7  per  cent.,  the  differences  being  those 
of  1823  from  1821  ;  an  agreement  of  sign  in  the  "Bal- 
ance "  column,  and  a  "  disagreement  "  in  the  "  Exports  " 
column,  with  the  change  in  the  "  Duty  "  columns.  The 
differences  are  68  in  number,  but  of  these  13  are  excluded 
because  the  change  of  duty  was  ambiguous, — in  one  direc- 
tion when  the  comparison  is  on  total  imports,  and  in  the 
other  on  dutiable  imports.  I  have  divided  the  remaining 
55  into  five  equal  portions,  to  show  whether  and  how  far 
there  is  a  regularity  in  the  effect  of  the  tariff.  In  the 
following  table,  the  second  column  shows  the  number  of 
years  excluded,  within  the  interval  designated,  for 
ambiguity  of  change  in  direction  of  the  duty  ;  the  fourth 
and  fifth  show  the  number  of  increases  and  of  decreases 
within  the  interval  ;  the  sixth  and  seventh  the  total 
extent  of  the  changes  of  duty  in  the  included  years, 
according  to  both  methods  of  reckoning,  changes  in  both 
directions  being  added  together  indifferently  ;  the  eighth 
and  ninth  the  number  of  agreements  and  of  disagreements 
of  sign,  between  the  change  in  the  duty  and  that  in  the 
merchandise  balance  ;  the  tenth  the  total  excess  of  the 
changes  in  this  balance,  on  the  side  of  agreement  or  of 
disagreement  with  the  changes  of  duty,  the  two  being 
added  separately  without  regard  to  intrinsic  sign,  and  the 
difference  being  distinguished  by  A  or  D  according  as  it 
agrees  or  differs  ;  and  the  last  three  columns  show  a  like 
treatment  of  the  merchandise  exports. 


BALANCE    OF    TRADE   AXD    CURRENCY   SUPPLY.      7 1 


•a 

■0 
•a 

_3 

Changes  in  Duty. 

Cha 

nges  in  Balance. 

Changes  in 

Exp.  Md-. 

J 

d 

, 

X 

Q  "■ 

c^  S 

\A 

N 

No. 

'Oi 

Xo. 

^ 

Dates. 

t 

2 

c  " 

c  « 

u  •"' 

B 

A 

CJ   u 

X    B 

>- 

> 

w  1 

+ 

z  s 

z  s 

A 

D 

0 

A 

T) 

0 

Oi-l 

55 

"^ 

H 

H 

1822-32 

0 

6 

5 

62.3 

65.1 

8 

3 

A6.3I 

4 

7 

D3.7fi 

1333-4S 

5 

4 

7 

65.8 

63-3 

4 

7 

D2.I5 

3 

8 

D5.52 

1849-62 

3 

6 

5 

47-5 

42.1 

8 

3 

A  3.16 

6 

5 

D6.31 

1863-74 

I 

6 

5 

49.6 

69.0 

5 

6 

D4-33 

I 

10 

D I I . 99 

1S75-S9 

4 

6 

5 

23.8 

17.6 

5 

6 

D5.00 

5 

6 

D6.52 

1S22-89 

13 

55 

28 

27 

249.0 

257-1 

30 

25 

D2.01 

19 

36 

D34.10 

The  inferences  from  this  test  appear  to  be  that  changes 
in  the  tariff  lead  to  changes  in  agreement  with  them  in 
the  balance,  more  than  half  the  time,  while  the  aggregate 
effect  of  those  changes  is  in  disagreement,  by  something 
less  than  a  cent  per  capita  for  ev^ery  one  per  cent,  that  the 
duty  is  changed  ;  also  that  the  resulting  changes  in  the 
volume  of  exports  are  in  disagreement  (falling  as  the  duty 
rises,  rising  as  it  falls)  in  about  two  thirds  of  the  cases, 
and  that  the  total  effect  is  nearly  fourteen  cents  per  capita 
for  every  one  per  cent,  change  in  the  duty. 

In  the  examination  above  made,  the  interval  of  time  for 
which  changes  in  duty  and  in  exports  were  compared  was 
fixed  at  two  years.  Had  I  made  it  three  years,  my  results 
would  have  been,  as  I  have  proved  by  actual  trial,  practi- 
cally the  same ;  and  for  reasons  already  given,  the  shorter 
interval  appeared  preferable  to  use  in  exhibiting  the  de- 
tailed results.  In  explanation  of  my  rejecting  as  altogether 
untrustworthy  the  single  year  interval,  or  the  succession 
of  year  to  year,  and  the  greatly  diminished  ratio  of  decre- 
ment of  export  to  increment  of  duty  given  by  it,  I  have 


72  ECONOMIC  AXD   INDUSTRIAL    DJJ.USWNS. 

two  or  three  points  to  offer,  (i)  International  exchanges 
generally  take  several  months  for  their  completion  ;  the 
exportation  made  in  one  fiscal  year  may  not  be  paid  for 
by  its  corresponding  importation  till  some  time  in  the 
next,  so  that  the  tables  will  not  show  the  dependence  of 
tile  one  on  the  other  unless  the  time  is  sufficiently  ex- 
tended to  cover  both  transactions.  (2)  The  effect  of  in- 
creased duties  appears  sometimes — strangely  enough,  I 
confess — to  be  felt  in  diminished  exportations  before  it  is 
shown  in  the  customs  collections.  Three  illustrations  of 
this  are  shown  in  the  figures  for  the  years  1828,  1861,  and 
1884.  Those  three  years  were  all  distinguished  by  acts 
of  Congress  increasing  the  duties,  the  act  in  the  last  case 
having  gone  into  effect  as  early  as  1883.  The  tables 
furnished  by  the  treasury  give  no  sign  of  the  increase  in 
their  columns  of  duty-rates  until  the  years  following,  and 
yet  those  three  years  all  show  diminished  exportations. 
If  this  is  the  inconsistency  I  consider  it,  it  is  one  that  the 
longer  interval  serves  to  reconcile.  (3)  No  rejection,  or 
even  overthrow,  of  the  reasoning  just  set  forth  can  deprive 
of  significance  the  well-established  fact  that  when  the  in- 
terval is  extended  to  two  or  more  years  the  connection  be- 
tween duties  and  exports  is  as  stated.  There  is  the  fact, 
and  how  are  we  to  account  for  it  ?  I  cannot  .conceive  the 
possibility  that  we  can  get  a  true  law  of  association  of  two 
series  of  phenomena  by  comparing  them  one  by  one,  and 
a  false  law  by  comparing  them  in  twos  or  threes,  though  I 
can  easily  understand  how  the  latter  comparison  may  give 
us  the  real  law  of  connection,  which  is  disguised  in  the 
former  by  the  introduction  of  an  accidental  element — 
which  necessarily  tends  to  diminish  the  effect  of  the  law. 
Let  me  make  my  meaning  clearer  by  another  example. 
Statisticians  show  that  the  number  of  marriages  dimin- 
ishes, other  things  equal,  as  the  price  of  grain  increases, 


BALANCE   OF    TRADE  AND    CURRENCY  SUPPLY.     73 

and  it  is  naturally  argued  that  the  relation  is  one  of  cause 
and  effect.  Would  the  confidence  of  any  one,  either  in 
the  existence  of  the  connection  between  the  two  orders  of 
events,  or  in  that  of  a  law  causing  the  connection,  be 
lessened  because  he  could  find  no  satisfactory  evidence  of 
it  in  comparison  of  successive  weeks,  or  even  of  successive 
months  ?  The  price  of  grain  might  easily  rise  between 
May  and  June,  for  instance,  and  the  number  of  marriages 
increase  at  the  same  time,  without  exciting  our  suspicions 
at  all,  while  the  same  lack  of  correspondence  between 
practice  and  theory  in  comparing  years  or  groups  of  years 
would  make  us  quite  doubtful.  It  is  right,  of  course,  to 
place  on  record  the  fact  that  the  higher  duty  appears  less 
effective  in  repressing  exportation  when  the  changes  are 
studied  by  successive  years,  but  it  is  no  less  right  to  show 
that  it  appears  less  effective  only  because  part  of  its  real 
force  is  lost  in  such  an  examination. 

COMPARISON     OF     DUTIES     AND     COMMERCE,     BY     AVERAGES    OF 
GROUPS    OF     YEARS. 

In  the  accompanying  illustration  the  seventy  years  are 
divided  into  fourteen  groups  of  varying  extent,  three 
being  as  short  as  two  years,  and  two  as  long  as  ten.  The 
divisions  are  marked  by  dotted  perpendicular  lines  on  the 
chart,  and  the  design  has  been  to  include  in  each  group 
as  many  years  as  showed  a  nearly  uniform  tariff  rate,  by 
one  at  least  of  the  two  reckonings.  Exceptions  to  this 
rule  are  two  transition  periods,  about  1832  and  1871  ;  and 
the  four  years  of  the  Civil  War,  which  are  excluded  from 
uhe  calculation — neither  the  sudden  decline  of  exports 
with  which  these  began,  nor  the  sudden  recovery  with 
which  they  closed,  being  fairly  to  be  regarded  as  an  effect 
of  the  tariff.  There  was  considerable  fluctuation  of  the 
rate  on  dutiable  imports  during  the  period   1834  to  1843, 


74 


F.COXOMfC  AND   INDUSTRIAl.    DIJAJ SIGNS. 


but  it  was  too  irregular  to  .show  any  .suitable  point  of 
division  ;  and  since  the  falling  off  in  exports  which  began 
with  1837  was  probably  due  to  the  commercial  crisis 
(although  such  an  effect  was  hardly  perceptible  in  later 
crises),  it  seemed  to  be  fair  to  include  several  years  before 
and  after  that  date  in  the  same  period.  The  average 
duties  and  export  values  are  indicated  both  in  figures  and 
graphically  in  the  accompanying  diagram  ;  the  changes  of 
sign  are  there  explained  and  summarized,  and  here  follow 
the  differences,  for  the  years  of  change  from  one  period  to 
the  next.  Agreements  and  disagreements  arc  indicated, 
as  in  the  table  already  given  and  explained. 


Change  in  Duty. 

1^ 

V     1 

u 

Wo 
0 

« 

1    . 

1  „. 
1-1  0 
^1 

Condensed  Tariff  History. 

1823 
1826 
1828 
I83I 
1833 
1843 
1846 
1856 
1861-65 

1870 
1872 

1875 
1884 

+  3-4 
+  3-3 
+  4-5 

-II. 8 
—2.2 
+  2.3 
-7-2 
-5-2 

+  27.0 

-4.9 
-3.6 

+  4.1 
+  2.4 

+  2.7 

+  3-5 

+  3-5 

-14.2 

—  10.5 
+  10.4 

-4-5 
-6.5 
+  27.6 

-5-9 

—  10.6 

+  1-5 
+  1.2 

A  0.50 
D  0.33 
A  0.21 
A  0.62 
D  0.42 
A  0.36 
A  0.78 
A  0.15 
D  1.24 

A  0.86 
D  2.27 

A  4.06 
D  2.32 

A  0.96 
D  1. 18 
D  0.31 
D0.64 
Do.  75 
D  1.48 
D  2.19 
D  1.69 
D  0.60 

D  2.39 
L>i.57 

A  1.94 
D  2.18 

)  Tariff  of  1824,  some  provisions  of 
)     which  were  later  going  into  effect. 

Duties  raised  by  Act  of  1828. 

Duties  gradually  lowered,  1830-32. 

Compromise  Tariff,  1833. 

Higher  duties,  Act  of  1842. 

Walkei  Tariff,  1S46. 

Walker  Tariff  further  reduced,  1857. 

Morrill  Tariff,  1861  ;  duties  raised, 
successive  years. 

Small  reductions  in  war  duties,  1870. 

Free  list  enlarged  and  10  per  cent, 
taken  off,  1872. 

Ten  per  cent,  restored,  1S75. 

Duties  variously  modified,  18S3. 

Total 

81.9      102.6 

A  0.96 

D  12.08 

The  inferences  from  this  table  appear  to  be  that  changes 
in  the  tariff  lead  to  changes  agreeing  with  them  in  the  bal- 
ance, whose  aggregate  effect  is  about  a  cent  per  capita  for 


VALUE  Ol"  EXPORTED  MERCHANDISE  AND  MERCHANDISE  BALANCE  PER  CAPITA,  COMPARED 

WITH  RATES  OF  IMPORT  DUTY. 


IMP  £X'P~     \  PC/)  CAP.  I    DATCi 


I&2.5 


1630 


labs 


16^0 


la^s 


leso 


/65S- 


1860 


-  ia(>5 


/670 


1875 


/660 


/eas 


/690 


'i-Op.c.    30P.C.     ZQp.t.. 

\ff^^  iT„f„  ,  (■  -n  t„    ^  +  denotes  a  rise 
Alter  Kate  ot  Duty    -  ,        ,  ,  ,, 


denotes  a  fall. 


•  f.      T-       .,    j  +  denotes  increased  Exports  or  diminished  Imports, 
vxcesb    ^  _  (igj^Qfgj.  iiiminished  Exports  or  increased  Imports. 


\u^    T?        Tvri        \  +  shows  nicrease. 
After  Exp.  Mdse.  -  ,  , 

^  I  —  sho^^•s  decrease. 


Between  Excess  and  Rate  of  Duty,  8  agreements  of  sign  and  5  disagreements  )  1861-1865,  period  of  Civil  War, 

Between  Exp.  Mdse.  and  Rate  of  Duty,  2  agreements  of  sign  and  11  disagreements    )  omitted. 

Rates  of  Duty  and  excesses  of  Imports  laid  off  to  the  Left  ;    Export  totals  and  excesses  to  the  Right. 
Values  of  Imported  Merchandise  per  capita  denoted  Ijy  spare  shaded. 


BALANCE    OF    TRADE   AND    CURRENCY   SUPPLY,     75 

every  one  per-cent.  ad  valorem  change  in  the  duty ;  and 
to  changes  of  opposite  sign  in  the  volume  of  exported 
merchandise,  eleven  out  of  thirteen  in  number,  and  in 
amount  nearly  fifteen  cents  for  every  one  per-cent.  change 
in  duty  on  dutiable  merchandise,  or  to  nearly  twelve 
cents  for  every  one  per-cent.  change  on  total  imported 
merchandise. 

EFFECTS    STATED    AS    LAWS. 

This  examination  into  the  commercial  history  of  the 
country  seems  to  me  sufficiently  decisive  of  the  two 
points  chiefly  involved,  to  permit  the  statement  of  its 
results  in  the  form  of  laws,  as  follows  : 

I.  The  effect  of  a  change  in  the  tariff  on  the  total  value 
of  exported  merchandise  per  head  of  population  is  to 
increase  it  if  the  tariff  is  lozvered,  to  reduce  it  if  raised ; 
this  result  may  be  expected  about  eleven  times  out  of 
thirteen,  where  the  change  is  significant  in  extent,  and 
may  be  estimated  at  about  thirteen  cents  for  every  one  per- 
cent, by  which  the  duties  are  changed.  This  ratio  has 
nothing  precise  or  invariable  about  it :  it  only  represents 
the  average  of  our  experience  for  the  last  seventy  years, 
and  indicates  what  we  may  expect  for  the  future,  so  far 
as  other  essential  conditions  remain  unchanged.  We  can- 
not infer  from  it,  for  instance,  exactly  w^iat  effect  the 
McKinley  tariff  of  1890  is  going  to  have,  until  we  have 
seen  whether  that  tariff  is  more  effective  by  its  increases 
in  the  duty  on  dutiable  imports,  or  by  its  increases  in  the 
number  of  free  imports ;  also,  until  the  present  revival  of 
export-business  from  its  lowest  point,  about  1886  (shown 
in  the  upward  direction  since  that  date  of  both  United 
States  and  British  Export  curves)  shall  have  spent  its 
force  ;  or  else  until  the  McKinley  changes  shall  have  been 
reversed.     No  effects  on  trade  can  well  be  inferred  from 


76  ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

one  year's  trial,  as  explained  above  ;  the  only  thing  we 
can  say  is  that  there  will  be  occasion  for  surprise  if  we 
find  any  sign  of  a  different  kind  of  effect  on  the  total 
volume  of  imports  and  that  of  exports.  In  general,  the 
depressing  influence  of  the  tariff  is  the  same  on  both,  as 
follows  from  the  law  stated  below. 

II.  The  effect  of  a  change  in  the  tariff  on  the  balance 
of  imports  and  exports  is  altogether  uncertain  ;  in  fact,  so 
far  as  the  experience  of  the  last  seventy  years  informs  us, 
there  is  no  evidejice  of  any  effect  whatever.  The  money 
metals  move  in  accordance  with  their  demand  and  supply  ; 
there  is  a  greater  outflow  or  inflow  of  valuables  in  accord- 
ance with  the  condition  of  credit  and  indebtedness  ; 
higher  or  lower  taxation  does  not  affect  their  movement. 
The  often-repeated  claim,  dating  back  to  immemorial 
antiquity,  that  we  can  by  high  import  duties  turn  the 
balance  of  trade  "in  our  favor"  is  a  mere  pretence, 
without  a  molecule  of  fact  to  rest  on. 

The  charge  that  the  terrible  "  Compromise  Tariff  "  of 
Clay,  in  1833,  is  responsible  for  the  great  excess  of  our 
importations  about  that  date  is  readily  disposed  of  by  a 
glance  at  the  chart,  which  shows  that  the  excess  began 
with  1 83 1.  It  is  easy  to  mislead  people  about  the  history 
of  the  times  leading  up  to  the  terrible  date  1837,  because 
so  few  of  those  then  living  were  in  a  position  to  observe 
accurately  what  was  going  on  about  them  ;  but  the  fact  is 
known  to  have  been  that  those  years  were  marked  by  an 
epidemic  of  speculation — and  we  bought  more  things  than 
we  sold,  because  we  managed  to  live  a  good  deal  on 
credit.  It  is  also  charged  that  the  "  Walker  Tariff " 
of  1846  led  to  the  large  excess  of  importations  which  set 
in  a  few  years  later.  That  charge  we  will  of  course  con- 
fess, as  soon  as  it  is  satisfactorily  proved  that  the  lower 
duties  caused  the  discovery  of  gold  in  California.     The 


BALANCE   OF    TRADE  AND   CURRENCY  SUPPLY,     jy 

chart  shows  that  no  such  effect  followed  them  until  1850, 
after  the  discovery  had  made  itself  felt ;  and  it  also  shows 
that  the  effect  continued,  even  in  greater  measure,  after 
the  duties  had  been  enormously  increased.  The  only 
remarkable  turn  of  the  trade  balance,  besides  that  of  1837 
in  one  direction,  and  that  following  the  gold  discoveries  in 
the  other,  was  the  one  between  1874  and  1878;  this  was 
a  greatly  magnified  copy  of  the  turn  in  1838  to  1840,  or 
that  in  1858,  and  its  chief  lesson  for  us  is  that  years 
of  scarcity  succeed  years  of  prodigality — a  season  of 
speculation  has  to  be  avenged  by  one  of  paying  debts. 
Strangely  enough,  this  turn,  instead  of  following  an 
increase  of  taxation  as  it  ought,  followed  instead  a  slight 
relief  from  taxation,  and  it  was  not  reversed  until  after 
the  duties  had  been  increased  again.  The  fact  is  thus 
opposite  to  the  requirement  of  the  last-century  school  of 
economists.  There  is  no  mystery  about  the  explanation 
of  these  facts ;  it  is  not  that  a  change  of  import-rates 
operates  sometimes  in  one  way  and  sometimes  in  another, 
but  simply  that,  for  this  particular  purpose,  it  does  not 
operate  at  all.  The  obstruction  that  the  tariff  puts,  and 
is  intended  to  put,  in  the  way  of  importation  acts  not  only 
as  an  obstruction,  but  as  an  equally  efficient  obstruction 
in  the  way  of  exportation  ;  and  that  for  the  very  simple 
but  satisfactory  reasons  that  people  are  not  willing  to 
send  their  goods  abroad  without  receiving  pay  for  them, 
and  that  the  enactment  of  a  tariff  has  no  power  to  create 
any  difference  in  the  relative  demand  for  specie  between 
this  and  other  countries. 

NEED  OF  DEMONSTRATING  THE  EXPORT  LAW, 

The  demonstration  of  the  simple  principle  that  any 
scheme  for  cutting  off  imports  must,  other  conditions 
remaining  unchanged,   cut   off  exports   in  just  the  same 


78  ECONOMIC  AND  INDUSTRIAL   DF.I.rsiONS. 

measure,  has  cost  many  precious  pages  ;  but  it  is  entitled 
to  them,  being  a  principle  of  vital  significance.  To  my 
own  mind  it  has  always  been  a  truism — an  inevitable 
inference  from  a  knowledge  of  what  international  trade  is, 
and  how  money  is  set  in  motion  between  countries.  But 
this  matter-of-course,  this  necessary  inference,  is  exactly 
the  point  which  the  uninstructed  mind  is  most  apt  to 
overlook,  and  which  the  protection-advocate  is  most 
certain  to  ignore — it  may  even  be  set  down  as  one  of  the 
distinguishing  marks  of  the  protective  mind,  that  of  look- 
ing at,  as  a  matter  of  course,  the  exact  reverse  of  this : 
assuming  that  its  scheme  of  a  valve  opening  outward  and 
not  inward  could  actually  work  in  practice,  and  that  its 
contrivance  of  free  exports  and  restricted  imports  could 
give  us  a  condition  of  things  like  that  w^iich  surprised  the 
exile  of  Erin  when  he  failed  to  loosen  the  cobble-stone, 
"  a  country  where  they  let  the  dogs  run  loose  and  chain 
down  the  pebbles."  Perhaps  a  few  of  the  quibbles  by 
which  it  is  sought  to  turn  aside  this  death-blow  to  half 
the  Protectionist  case  may  be  worth  the  trouble  of 
exposing. 

It  is  pretended  that  the  principle  takes  the  form, 
imported  must  always  equal  exported  merchandise,  and 
that  any  run  of  successive  years  when  specie  is  imported 
or  exported  is  fatal  to  it.  What  it  declares,  however, 
is  merely  that  the  course  of  specie — which  is  determined 
like  other  commercial  movements  by  supply  and  demand 
— is  not  changed  by  changing  the  scale  of  import  duties. 
That  course  may  be  inward  or  outward  under  either  kind 
of  duty,  and  it  will  continue  the  same  way  until  turned  by 
some  change  in  the  demand  for  or  supply  of  the  money 
metals. 

Attention  is  called  to  changes  in  the  importation  of 
certain    particular    articles,    which    undoubtedly    follow 


BALANCE   OF    TRADE  AND    CURRENCY  SUPPLY,     jg 

changes  in  the  duty.  In  these  cases  the  balance  is  of 
course  preserved  by  opposite  changes  in  other  articles. 

Stress  is  laid  on  the  fluctuations  in  our  trade  with 
particular  nations,  which  tariff  changes  may  easily  cause. 
A  large  import  trade  may  easily  spring  up,  or  be  cut  off, 
between  our  own  country  and  some  other,  without  affect- 
ing our  exports  thereto.  In  these  cases  the  balance  is  of 
course  preserved  by  opposite  changes  in  our  trade  with 
other  countries. 

The  favorite  objection  to  this  fundamental  principle  is 
its  assumed  dependence  on  a  theoretical  foundation.  In 
the  argument  of  this  chapter,  theory  and  experience  have 
been  kept  separate  :  commerce  and  rates  of  duty  have  in 
these  latter  pages  been  treated  simply  as  two  series  of 
phenomena,  between  which  a  connection  was  to  be  deter- 
mined experimentally.  The  result  has  been  that  induc- 
tion confirms  deduction,  and  that  the  state  of  things 
originally  inferred  from  the  nature  of  commerce  is  found 
to  exist  in  carefully  tested  experience. 

The  principle  thus  demonstrated  is  the  first  requisite  to 
an  understanding  of  the  Tariff  Question.  It  is  of  in- 
dispensable importance  to  hold  distinctly  in  mind  as  a 
conclusively  demonstrated  fact,  that  a  retrenchment  of 
any  part  of  our  import  trade  involves  the  sacrifice  of  an 
equivalent  part  of  our  export  trade.  With  this  principle 
alone  as  capital,  we  can  enter  at  once  upon  a  very  ex- 
tended business  in  answering  protective  assumptions  and 
appeals. 

EXAMPLES    OF     ASSUMPTIONS     OVERTHROWN     BY     THE     EXPORT 

LAW. 

Noticing  that  a  large  amount  of  some  article,  tinned 
plate  for  instance,  is  now  imported,  certain  men  who 
desire  to  meet  the   demand   at  higher   prices   than  their 


80  FXONOMIC  AXD   IXDUSTKIAL   DI.IJ' SIQXS. 

countrymen  arc  now  paying,  start  a  highly  colored  talc  of 
great  advanteiges  to  come  to  us  from  cutting  off  the 
importations,  and  "  giving  "  our  own  citizens  the  work  of 
producing  the  article.  This  is  all  well  enough,  as  long  as 
we  regard  only  the  true  end  of  the  plea,  to  enrich  certain 
men  through  legislative  favoritism  ;  but  when  we  treat  it 
as  we  are  invited  to  treat  it — as  something  in  which  the 
rest  of  us  are  interested,  our  fundamental  principle  re- 
quires us  to  consider  whether  something  else  of  equal 
value,  not  now  imported,  is  to  be  brought  in  in  place  of  the 
tinned  plate,  and  if  so  what  else  ;  or  whether  something 
else  of  equal  value  now  exported  is  to  be  retained — either 
thrown  on  an  already  supplied  market  or  no  longer  pro- 
duced— and  if  so  what  else  ;  or  whether  some  degree  of 
both  these  effects  is  to  follow,  and  if  so  in  what  way. 
Nor  is  that  all,  for  then  we  have  to  w-eigh  the  relative  ad- 
vantages of  producing  in  this  country  the  tinned  plate,  or 
other  article  supposed,  and  of  producing  whatever  we 
may  at  present  export  in  payment  for  that  article,  and 
could  no  longer  export  if  the  article  were  made  here.  I 
admit  that  the  mental  work  which  our  legislators  actually 
perform  in  deciding  on  a  tariff  schedule  is  very  much 
easier  than  would  be  required  for  complete  solution  of 
problems  like  these  ;  but  I  must  regard  as  evidence  of 
hopeless  incompetence  their  ignorance,  or  pretended 
ignorance,  that  justice  can  be  done  to  any  tariff  ques- 
tion without  solving  them. 

Another  instance :  the  question  is  asked  whether  we  pro- 
pose to  give  our  support  to  American  labor  or  to  foreign 
labor,  in  providing  the  things  we  need.  There  are  many 
of  us  who  can  see  that  this  is  nonsense — that  whenever 
Americans  get  anything  worth  getting,  they  must  get  it 
by  American  labor,  or  else  by  American  stealing — nation 
and  individual  citizen  being  alike  in  respect  to  this  alter- 


BALANCE   OF    TRADE  AND    CURRENCY  SUPPLY.     8 1 

native — who  are  yet  unable  to  tell  how  it  is  proved  to  be 
nonsense.  The  demonstration  depends  upon  the  same 
principle  :  that  the  tariff  law  which  changes  the  relative 
conditions  of  production  of  a  particular  article  at  home 
and  abroad  can  make  no  change  in  the  aggregate — in  the 
conditions  of  all  production, — so  that  what  is  gained  on 
one  product  is  lost  on  another.  Stimulation  or  depression 
of  any  production  is  stimulation  or  depression  of  the 
demand  for  labor  on  that  production  ;  and  hence  if  the 
tariff,  by  favoring  the  production  of  one  kind  of  goods, 
restricts  that  of  another,  it  necessarily  exerts  the  same 
opposite  effects  on  the  labor  employed  in  the  two.  The 
subject  will  be  considered  more  fully  in  a  later  chapter. 

The  whole  policy  of  new  steamship  lines  to  Southern 
American  republics,  as  often  stated,  is  made  to  depend  on 
the  notion  that  a  little  improvement  in  our  communica- 
tion with  those  states  will  tend  to  put  our  exports  to 
them  more  nearly  on  a  par  with  our  imports  from  them. 
Why  such  a  result,  rather  than  the  exact  reverse,  is  to  be 
expected  of  the  means  recommended,  no  one  ever  ex- 
plains. But  supposing  it  successfully  attained,  it  would 
inevitably  at  the  same  time  reduce  our  exports  to  Europe 
more  nearly  within  the  pattern  of  our  imports  thence.  It 
plainly  follows  that  the  value  of  the  policy  must  be 
decided  by  balancing  against  the  advantage  of  the  sup- 
posed increased  sales  to  Southern  America  the  resulting 
disadvantage  of  decreased  sales  to,  or  increased  imports 
from,  Europe — is  therefore  quite  doubtful,  leaving  all  out 
of  view  its  first  cost.  What  advocate  of  subsidies  ever 
showed  his  capacity  to  grasp  this  principle,  the  very 
principle  on  which  all  such  policies  ought  to  stand  or  fall? 

The  application  of  the  Export  Law  to  the  question  of 
securing  a  large  favorable  trade-balance  has  sufficiently 
exposed  the  pretence  that  tariff  rates  have  even  a  ten- 


82  ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

dency  to  discourage  imports  without  discouraging  ex- 
ports. That  such  a  result  should  in  the  least  be  desired, 
in  view  of  the  fact  that  imports  are  additions  to  our  pos- 
sessions, while  exports  are  but  the  cost  at  which  we  gain 
those  additions — and  especially  in  view  of  recent  British 
experience — I  have  always  thought  strange  enough  ;  but 
its  impossibility  of  attainment  leaves  nothing  worth  dis- 
cussion in  the  policy  of  seeking  it. 

KEEPING    MONEY    IN    THE    COUNTRY. 

Closely  connected  with  this  "  balance  of  trade  "  pre- 
tence is  another;  that  the  duties  are  necessary  for  keeping 
gold  in  the  country.  Its  advocates  seek  to  make  their 
position  solid  by  bringing  forward  instances  of  the  distress 
that  has  sometimes  attended  a  deficiency  of  currency 
within  our  borders.  This  of  course  goes  for  nothing 
when  we  discover  that  high  duties  do  not  bring  money  to 
us,  nor  low  duties  send  it  from  us  ;  but  there  is  more  to 
say.  Even  supposing  that  legislation  of  the  sort  could 
affect  the  supply  of  currency,  is  that  a  reason  for  adopting 
it  ?  The  distress  from  exhaustion  of  currency  could  be 
but  a  trifle  to  what  would  follow  exhaustion  of  cereals, 
and  yet  we  never  think  of  discouraging  exportation  of 
them — we  prefer  even  to  encourage  it, — calculating  with 
well-founded  assurance  that  when  the  amount  exported 
threatens  to  reach  a  dangerous  point,  the  exportations 
will  stop  by  the  action  of  the  ordinary  laws  of  demand 
and  supply.  Just  so  is  it  with  specie.  It  is  adequately 
understood  by  few  not  personally  engaged  in  international 
commerce,  what  a  delicate  apparatus  exists,  in  the  work- 
ing of  Foreign  Exchange,  for  the  perfect  regulation  of  its 
movements.  Any  amount  of  trade  may  take  place  with 
no  movement  of  money,  so  long  as  imports  and  exports 
balance  ;  but  as  soon  as  the  balance  inclines  far  enough 


BALANCE   OF   TRADE  AND    CURRENCY   SUPPLY.     83 

one  way  to  necessitate  shipment  of  coin,  the  cost  of  ex- 
change tends  at  once  to  rise  in  the  country  that  sends  it, 
and  to  fall  in  the  one  that  receives  it,  and  it  takes  but 
little  of  this  action  to  convert  the  movement  of  specie 
into  a  movement  of  goods.  Local  distress  for  want  of 
currency,  nevertheless,  sometimes  occurs ;  it  occurs  under 
any  condition  of  revenue  laws  ;  and  though  regrettable,  it 
is  as  unavoidable  as  the  local  distress  for  want  of  grain 
that  sometimes  appears,  even  in  so  great  a  grain-pro- 
ducing country  as  this — as  recently  in  Dakota,  for  in- 
stance. 

People  talk  of  the  amount  of  currency  needed  in  a 
country  as  though  this  amount  were  some  definite  thing, 
and  could  be  calculated  without  taking  account  of  foreign 
trade.  But  is  that  in  any  sense  the  fact  ?  Can  any  rea- 
son be  given  why,  if  a  nation  had  no  foreign  trade,  a  small 
amount  of  currency  would  not  serve  it  precisely  as  well  as 
a  larger?  If  a  man  had  only  fifty  cents  for  every  dollar 
he  now  has,  and  the  price  of  everything  he  wanted  to  buy 
fell  one  half,  would  he  not  be  just  as  rich  as  now  ?  So  of 
a  community,  or  a  country.  It  is  only  because  it  may 
come  into  business  relations  with  some  other  community 
or  country  that  has  a  greater  supply  of  money  and  goods 
at  higher  prices,  that  it  need  take  a  thought  for  its  own 
supply.  When  "  money  is  tight  "  in  any  place  it  is  not 
because  the  amount  in  general  circulation  is  small,  but  be- 
cause calculations  have  been  made  on  a  greater  amount 
than  actually  exists — which  can  happen,  and  does  happen, 
whatever  the  amount.  If  we  are  to  have  foreign  trade, 
the  exchange-mechanism  will  adjust  the  supply  better 
than  legislators  could  ;  if  foreign  trade  is  to  be  cut  away, 
the  question  need  never  trouble  us. 

It  is  a  common  error  to  ascribe  to  a  large  supply  of 
currency  the  results  that  are  due  to  an  increasing  supply. 


84  J'.CONOMIC  AND   lA'DUSTKIAf.    JU-.IJ'SIOA'S. 

People  arc  so  constituted,  I  admit,  as  to  be  stimulated 
while  prices  are  increasing  and  "money  easy";  depressed 
while  prices  are  falling,  even  though  cost  of  production 
falls  equally.  And  so  long  as  men  are  thus  constituted, 
they  get  the  same  kind  of  benefit  from  an  increasing  sup- 
ply of  money  as  if  its  imagined  advantages  were  real, 
while  any  increase  in  the  purchasing  power  of  money  is 
similarly  a  hardship.  But  even  if  we  could  grant  the 
power  of  import  duties  to  increase  at  first  the  money 
supply,  we  must  see  that  when  they  have  once  done  this, 
their  function  is  over  forever.  Fixed  duties  cannot  pos- 
sibly continue  to  increase  it.  No  more  can  be  done 
unless  the  duty  is  brought  yet  higher,  and  exports  along 
with  imports  reduced  in  consequence.  It  seems,  then, 
quite  fair  to  say  that  this  effect  of  tariff  duties  is  either  all 
imaginary  or  grossly  overstated  ;  that  the  need  of  govern- 
ment regulation  of  the  currency  supply  does  not  exist  ; 
and  that  if  any  good  effects  in  the  money  market  attend 
the  levying  of  a  higher  duty  they  are  evanescent  in  their 
nature. 

TARIFFS    AND    PANICS. 

From  this  assumed  effect  of  holding  specie  in  the  coun- 
try it  is  usually  reasoned,  by  those  who  trouble  themselves 
to  support  their  assertions  by  any  reasoning  at  all,  that 
protective  tariffs  have  the  power  to  ward  off  commercial 
crises  ;  or,  indeed,  any  effect  on  them  except  to  make  re- 
covery from  them  more  difficult.  There  can  be  no  ques- 
tion, however,  that  this  belief  in  the  power  of  high  duties 
to  prevent  panics  never  originated  in  any  rational  study 
of  cause  and  effect — it  w^as  merely  inferred  from  a  few 
circumstances  that  appeared  to  support  it.  Let  us  ex- 
amine those  circumstances  and  discover,  if  possible,  their 
true   relations.     The}-   are:    (i)   Commercial   crises   have 


BAT.AMCR    OF    TRADF.    AND    CURRENCY   SrPPl.V.      85 

been,  ill  our  country,  preceded  by  considerable  excesses 
of  imported  over  exported  goods — see  balance-of-trade 
curve  for  a  few  years  previous  to  1837,  1857,  and  1873. 
(2)  For  the  last  year  or  two  preceding  them  the  rates  of 
import-duty  show  a  diminution — see  Lariff  curves  for  same 
dates.  (3)  They  have  sometime?  occurred  when  the  rates 
were  low  by  the  operation  of  statutory-  reductions. 

The  first  of  these  conditions,  an  excess  of  imports  pre- 
ceding, and  a  great  diminution  of  them  succeeding  the 
crisis,  has  been  already  noted.  When  it  is  remembered 
that  the  commercial  crisis  is  essentially  a  malady  of 
credit — a  case  where  credit  is  stretched  until  it  snaps — - 
this  change  in  the  balance  of  trade  is  recognized  as  one 
way  in  which  this  stretching  and  snapping  is  naturally 
manifested.  There  is  no  reason  why,  since  our  general 
experience  is  that  tariff  rates  are  without  influence  on  the 
trade-balance,  we  should  credit  them  with  such  an  in- 
fluence in  these  exceptional  instances — should  suppose 
the  first  of  the  conditions  above  recapitulated  a  result  of 
the  second  rather  than  the  second  of  the  first.  The  evi- 
dence stands  as  follows  :  The  adverse  balance  consider- 
ably preceded  the  duty  reduction  (see  chart)  before  1873  ! 
the  reverse  order  seems  to  have  obtained  before  1857; 
and  it  is  doubtful  which  came  first  before  1837.  The  ex- 
planation how  the  great  increase  of  importations,  in  sea- 
sons of  inflated  credit,  may  be  a  cause — not  an  effect^ — -of 
the  decreased  duty-rates  reported  for  those  years  is  not 
evident  from  any  of  the  facts  I  have  collected  ;  but  I 
think  I  can  suggest  an  explanation.  When  credit  is 
strong  in  the  country  prices  go  up  ;  money  is  therefore 
worth  less  to  us  ;  and  hence  it  goes  more  largely  abroad 
for  imported  goods.  The  increased  demand  for  those 
goods  increases  their  cost  to  the  importer,  and  hence  re- 
duces the  ratio  of  all  specific  duties  upon  them  to  their 


86  ECONOMIC  AN  J)   INDC  STRIA  L   DELUSIONS. 

declared  value.  The  temporarily  lower  rate  may  there- 
fore be  regarded  as  a  sort  of  accident.  If  this  hypothesis 
is  correct,  no  such  effect  should  be  perceptible  on  ad  va- 
lorem duties.  The  "  Walker  Tariff  "  consisted  mainly  of 
such  duties,  and  the  chart  accordingly  shows  us  no  reduc- 
tion of  rate,  worth  considering,  for  the  few  years  just  be- 
fore 1857. 

It  is  unnecessary  to  say,  however,  that  the  assertion  of 
a  connection  between  duties  and  panics  is  not  based  on 
the  temporary  accidental  diminutions  belongiog  to  the 
second  condition  above  mentioned,  but  rather  on  those 
that  were  deliberately  contemplated  in  the  "  Compromise  " 
and  Walker  tariffs,  both  of  which  reduced  duties  and 
were  followed  after  some  interval  by  panics.  There  is  a 
great  convenience  about  assertions  of  this  kind — treating 
two  phenomena  as  cause  and  consequence  because  they 
occur  together  once  or  twice,  without  regard  to  whether 
they  can  be  connected  logically  or  not ;  one  allows  himself 
such  a  generous  margin  in  them.  All  that  is  necessary  is 
to  come  across  some  reduction  of  duties,  preceding  a 
crisis,  and  there  you  have  the  cause  of  that  crisis  ready  to 
hand,  with  no  need  of  further  information,  or  further 
thought  on  the  subject.  You  have  even  two  causes  some- 
times. The  business  troubles  beginning  in  the  summer  of 
1857,  Dr.  R.  E.  Thompson  is  perfectly  certain,  are  fully 
explained  by  the  reduction  of  duties  resolved  on  in  March 
of  that  year.  Mr.  Secretary  Blaine  ascribes  them  with 
equal  confidence  to  a  reduction  made  in  1846,  whose  effect 
had  meanwhile  remained  suspended  in  some  mysterious 
miraculous  manner.  Those  two  authorities  are  both  high, 
equally  high,  in  the  Protectionist  congregation,  and  there 
is  no  reason  why  any  choice  need  be  made  between  them. 
In  sober  earnest,  either  explanation  is  so  childish  in  its 
absurdity  that  one  can  excuse  himself  for  noticing  it  only 


BALANCE   OF   TRADE  AND    CURRENCY  SUPPLY.     8/ 

on  the  ground  that  he  is  obliged  to  notice  many  other 
absurdities  quite  as  childish,  just  as  the  clergyman  who 
had  to  preach  the  funeral  sermon  over  a  very  hard  case 
could  only  plead  :  "  Brethren,  if  the  departed  was  rather 
mean  in  some  things,  we  must  remember  that  he  was  still 
meaner  in  others." 

This  is  said  in  no  contempt  for  the  facts.  It  is  a  fact,  I 
admit,  that  the  crash  of  1857  occurred  after  duties  had 
been  put  exceptionally  low.  But  that  crisis,  though  very 
severe  in  its  onset,  was  far  less  extensive  and  lasting  than 
the  later  one  beginning  in  1873,  under  a  high  tariff;  while 
its  effects  disappeared  after  a  year  or  two,  we  took  six 
years  to  recover  from  the  great  crash  of  1873.  As  there 
is  no  doubt  that  duties  were  enormously  high  during  our 
last  panic,  Protectionists  generally  pass  it  over,  and  go 
back  to  that  of  1837,  claiming  that  the  troubles  of  that 
day  were  due  to  the  reductions  made  in  import  duties  by 
the  acts  of  1832  and  1833.  ^'^  should  be  remembered 
that  the  1833  act,  known  as  the  "  Compromise  Tariff," 
which  provided  for  general  import  rates  of  twenty  per 
cent.,  was  not  to  go  into  full  effect  until  1842,  nine  years 
after  its  passage.  It  was  the  result  of  an  understanding 
between  Clay  and  Calhoun,  representing  opposite  opin- 
ions on  the  subject,  Clay  admitting  that  no  industry  was 
entitled  to  protection  which  could  not  make  itself  self- 
sustaining  in  nine  years.  At  the  time,  the  reduction  was 
less  considered  as  a  source  of  financial  difficulties  than  the 
great  elevation  of  duties  in  1828,  whose  instigators  were 
put  to  it  to  satisfy  their  fellow-citizens  that  it  was  not 
their  own  measure  that  had  caused  the  trouble.  The 
notion  that  the  panic  was  brought  on  by  the  Compromise 
Tariff  seems  to  have  been  invented  many  years  later  by  an 
amiable,  ingenious,  and  undoubtedly  cranky  publisher  of 
Philadelphia,     Henry    Charles    Carey,    whose     writings, 


8<S  FCONOMIC  AiXn   IXDirsTRIAL    DF.I.USIONS. 

"  voluminous  and  vast,"  are  far  oftcncr  talked  of  than 
read  Carey  was  not  the  sort  of  person  who  would  con- 
sciously misrepresent  facts ;  but  the  mind  that  could 
overlook  the  real  causes,  reckless  speculation,  and  huge 
and  rapidly  increasing  State  and  municipal  debts  incurred 
for  internal  improvements,  to  say  nothing  of  the  collapse 
of  the  banking  system  of  the  country  under  the  well- 
meant  but  over-violent  attacks  of  an  impetuous  chief 
magistrate,  and  could  ascribe  such  an  effect  to  the  re- 
lief of  the  people  from  a  few  unendurably  oppressive 
import  taxes,  is  a  mind  too  distorted  and  prejudiced 
to  serve  as  a  guide  in  any  rational  inquiry. 

The  1837  crisis,  moreover,  involved  this  country  and 
Europe  together.  The  Europeans  had  another  severe 
crisis  ten  years  later,  in  1847,  j^st  after  a  large  reduction 
of  duties  in  this  country.  If  Carey's  invention  was  ever 
to  have  an  application,  then  should  have  been  the  time. 
But  of  the  1847  crisis,  in  which  we  ought  by  his  rules  to 
have  been  fatally  involved,  our  country  felt  not  a  trace, 
or  far  less  disturbance,  at  all  events,  than  it  underwent  in 
1825,  just  after  an  increase  of  duties.  A  particularly 
severe  crisis  began  with  us  in  1818,  under  circumstances 
very  like  those  of  1873  '  fo^  the  duties  were  then,  diso- 
bligingly enough,  decidedly  higher  than  they  had  been 
before  the  war. 

Having  seen  how  the  facts  really  stand  with  regard  to 
the  first  "  low  tariff  "  panic,  need  we  be  at  a  loss  to  account 
for  that  of  1857  ?  To  any  one  who  remembers  the  "  wild- 
cat "  currency  then  in  circulation,  whose  every  note, 
usually  made  payable  at  some  branch  bank  located  in 
an  inaccessible  place,  had  to  be  carefully  conned  and 
gauged — perhaps  discounted,  too — -before  it  could  be 
accepted,  and  the  shameful  inadequacy  and  venality  of 
the  State  banking  laws  under  which  the  most  of  it  was 


BALA.VCF.    Of    TRADE  AND    CURRENCY  SUPPLY.     89 

issued,  there  is  no  occasion  to  look  to  national  customs 
rates  for  an  explanation.  Credit  was  then  an  edifice  on  a 
shaky  foundation,  sure  to  collapse  when  built  up  high 
enough.  The  only  surprising  thing  about  the  1857  crisis, 
to  my  mind,  was  the  ease  and  buoyancy  with  which  we 
recovered  from  it.  In  that  respect  it  was  altogether 
exceptional. 

TESTIMONY    OF    HUGH    MCCULLOCH. 

To  supplement  this  fragmentary  sketch  of  our  panic 
history  in  the  best  way  possible,  I  add  a  few  paragraphs 
of  testimony  from  the  man  who,  of  all  men  living,  is  most 
competent  to  speak  on  the  subject,  and  whom  it  is  least 
possible  to  look  on  as  warped  or  hampered  by  prejudice. 
For  years  at  the  head  of  one  of  the  very  few  creditable 
and  successful  State  banking  systems,  afterward  Comp- 
troller of  the  Currency  at  the  most  critical  period  of  the 
war,  and  Secretary  of  the  Treasury  under  three  adminis- 
trations, Hon.  Hugh  McCulloch  needs  no  recommendation 
to  public  confidence  ;  while  his  well-known  standing  as  a 
Clay  Whig,  and  afterwards  an  earnest  Republican,  would 
certainly  acquit  him  of  partisan  bias,  were  it  possible  for 
any  reader  to  bring  any  accusation  of  the  sort  against 
language  so  calm  and  courteous — so  indicative  of  ripe 
knowledge,  clear  sagacity,  and  judicial  spirit.  The  fol- 
lowing paragraphs  are  taken  from  his  refutation  of  a  Pro- 
tectionist tirade  by  Mr.  Blaine,  and  first  appeared  in  the 
New  York  Times,  3d  of  February,  1890. 

'"THE    REVERSES    OF    1837. 

"  Of  these  reverses  and  all  subsequent  ones  I  can  speak 
advisedly,  because  I  held  positions  of  financial  responsi- 
bility and  had  personal  interests  at  stake.  I  was  in  1837, 
and  had  been  for  a  considerable  time,  the  manager  of  the 
branch  at   Fort  Wayne  and  a  member  of  the  Board  of 


90        F.coxo.vrc  Axn  jxdustriai.  delcsioxs. 

Control  of  the  State  liank  of  Indiana.  Mr.  Blaine's  state- 
ment that  'the  years  1834-5-6  were  distinguished  for  all 
manner  of  business  hazards,'  but  faintly  describes  them. 
They  were  years,  especially  1836,  of  the  wildest  specula- 
tion. In  the  East  it  was  varied  in  character,  but  its  dan- 
gerous elements  were  excessive  credits,  and  there  were 
few  things  that  could  be  bought  or  sold  that  were  not 
affected  by  it. 

"  In  the  West  it  was  confined  to  wild  lands  and  lands 
unimproved  and  town  lots,  many  of  which  never  had  any 
existence  except  upon  the  recorded  plats.  It  was  specu- 
lation similar  to  that  in  the  timber  lands  of  Maine  a  few 
years  before.  Lands  bought  of  the  Government  at  $1.25 
per  acre  were  soon  sold  on  credit  at  $4,  $5,  and  in  some 
cases  $10.  Hundreds  of  tracts  were  laid  off  in  town  lots 
where  the  original  forests  were  still  standing.  What  took 
place  under  my  own  observation  seems  now  to  be  too 
absurd  to  have  been  real.  On  the  Maumee  River,  from 
its  mouth  on  Lake  Erie,  there  was  for  miles  a  succession 
of  towns.  Some  of  them,  like  Maumee  City,  Perrysburg, 
Manhattan,  and  Toledo,  were  realities,  but  most  of  them 
existed  upon  paper  only.  In  the  spring  of  1836  a  young 
man  whom  I  met  at  IMaumee  City  said  to  me  that  he  had 
made  a  great  deal  of  money  in  a  few  months.  To  my  in- 
quiry how  he  had  made  it,  he  replied,  by  buying  and 
selling  lots.  '  Maumee  City,'  said  he,  '  lies,  as  you  know, 
at  the  foot  of  the  Rapids,  and  is  destined  to  be  one  of  the 
great  cities  of  the  West ;  property  is  rising  rapidly  in 
value,  and  I  am  buying  and  selling  every  day.' 

"  '  How  did  you  raise  the  money  to  commence  with  ? ' 
"  '  Oh,  very  little  money  is  required  in  this  business.     I 
pay  when  I  buy,  and   I   require  when  I  sell  a  lot  a  few 
dollars  to  bind  the  bargain  ;  but  nearly  everything  is  done 
upon  credit.' 


BALANCE    OF  TRADE   AND    CURRENCY   SUPPLY.      9 1 

"  On  my  way  from  New  York  to  Fort  Wayne,  in  the 
same  year,  I  stopped  overnight  at  a  hotel  in  Toledo. 
After  dinner  I  noticed  that  there  was  a  gathering  of  gen- 
tlemen in  the  parlor,  and  in  the  course  of  the  evening  I 
was  waited  upon  by  one  whom  I  knew  and  invited  to  join 
it.  '  Our  rule,'  said  he,  '  is  to  admit  no  one  to  these  meet- 
ings who  is  not  worth  $100,000.  As  you  are  a  banker,  you 
must  be  worth  at  least  that.'  This  was  far  from  being  the 
fact,  but  I  accepted  the  invitation.  The  company  con- 
sisted of  gentlemen  some  of  whom  I  knew  personally  and 
others  by  reputation.  They  were  politicians,  scholars, 
writers,  and  one  or  two  of  them  were  authors  of  consider- 
able renown,  but  not  one  was  there  whom  I  recognized  as 
being  engaged  in  regular  business  pursuits.  It  was  a  sort 
of  private  exchange,  at  which  the  members  made  them- 
selves rich  by  buying  and  selling  to  each  other  lands  and 
town  lots.  There  was  at  times  a  good  deal  of  excite- 
ment, much  like  that  which  is  witnessed  in  the  New  York 
Stock  Exchange.  When  the  meeting  closed  every  one 
felt  that  he  was  richer  than  when  it  opened.  In  a  few 
brief  months  there  was  not  one  of  these  hundred-thou- 
sand-dollar men  who  was  worth  a  hundred  thousand  cents. 

"results  of  the  speculative  mania. 

"  The  same  speculative  mania  prevailed  to  some  extent 
all  over  the  country.  It  originated  in  unwise  extension 
of  the  credit  system,  which  was  mainly  the  result  of  the 
removal  of  the  Government  deposits  from  the  United 
States  Bank  and  the  placing  of  them  in  State  banks. 
When  the  deposits  were  removed  there  was  among  con- 
servative men  great  apprehension  that  the  effect  would  be 
severe  financial  trouble.  To  prevent  this  it  seemed  to  be 
the  understanding  between  the  Secretary  of  the  Treasury, 
acting  under  the  direction  of  the  President  and  the  banks 


92  F.COjVOM/C  a. yd  J.\'I)lJSTk'IAr.   JJELL'srO.VS. 

—pet  banks  as  they  were  called — that  as  they  had  been  fa- 
vored by  the  Government  in  tlie  use  of  the  public  moneys, 
they  should  deal  liberally  with  their  customers.  This 
they  did,  and,  as  their  capitals  were  sufficient  to  supply 
the  demands  of  healthy  business,  the  loans  of  the  Govern- 
ment deposits  were  made  to  men  who  were  engaged  in 
speculative  enterprises.  Then,  too,  many  of  the  States 
were  engaged  in  works  of  internal  improverrtent,  and  were 
spending  large  amounts  of  money  which  they  had  obtained 
by  sales  of  their  bonds  in  Europe. 

"  In  addition  to  the  large  volumes  of  currency  thus  put 
into  circulation,  a  bank  under  the  name  of  the  Pennsylvania 
Bank  of  the  United  States  was  chartered  by  Pennsylvania, 
as  the  successor  to  the  United  States  Bank,  with  the  same 
capital  and  mostly  the  same  managers,  which  not  only 
loaned  its  money  in  a  manner  which  savored  of  reckless- 
ness, but  bought  large  quantities  of  cotton  on  its  own  ac- 
count. Never  were  credits  so  easily  obtained  nor  so 
unwisely  used  ;  never  to  the  superficial  observer  had  the 
country  been  so  prosperous. 

"  In  the  meantime,  however,  industry  was  declining 
and  all  kinds  of  agricultural  productions  were  command- 
ing exorbitant  prices.  Wheat  went  up  from  $i  to  $2  a 
bushel,  and  cotton  from  7  to  15  cents  a  pound.  A 
speculative  fever  everywhere  prevailed,  similar  in  char- 
acter, and  as  much  more  disastrous  in  consequences  as  it 
was  wider  in  extent,  to  the  South  Sea  bubble  in  England. 
Conservative  men,  strangely  enough,  as  well  as  adven- 
turers, were  its  abettors  and  its  victims.  Banking  institu- 
tions, and  especially  the  Government  depositories,  were 
in  a  great  measure  responsible  for  it,  and  not  a  few  were 
ruined. 

"  I  call  to  mind  one  case  which  interested  me  greatly. 
In  the  spring  of  1836  I  went  to  a  city  in  a  State  adjoining 


BALANCE    OF  TRADE   AND    CURRENCY  SUPPLY.      93 

Indiana  to  make  with  its  leading  bank  exchanges  of  New 
York  and  New  England  bank-notes  for  its  notes,  which 
were  receivable  at  the  Government  land  offices.  As  I 
knew  the  President  personally,  I  called  upon  him  at  the 
bank  after  banking  hours.  I  was  kindly  received,  but  I 
noticed  that  he  was  in  bad  humor,  which  he  did  not  try 
to  conceal,  the  cause  of  which  he  explained.  '  I  have,' 
said  he,  '  for  the  first  time  since  I  became  President  of 
the  bank,  been  squarely  overruled  in  a  matter  of  great 
importance.  I  do  not  like,'  he  went  on  to  say,  '  the 
business  outlook.  The  people  seem  to  me  to  have  gone 
mad,  and  if  I  am  not  greatly  mistaken,  they  will  soon 
find  out  that  the  prosperity  of  the  country  is  unreal.  We 
owe  the  Government  a  large  amount  of  money,  and  as  w^e 
have  enough  and  something  more  in  the  banks  of  New 
York  to  pay  it,  at  the  meeting  of  the  board  this  afternoon 
I  introduced  a  resolution  in  favor  of  paying  the  debt 
and  dissolving  our  connection  with  the  Government.  In 
offering  the  resolution,  I  explained  as  fully  as  I  was  able 
to  do,  my  reasons  for  doing  so.  I  was  listened  to  atten- 
tively, but  when  the  vote  was  taken,  there  was  but  one  vote 
(my  own)  in  its  favor.  Not  only  was  the  resolution  voted 
down,  but  I  was  instructed  to  use  the  money  to  our  credit  in 
New  York  in  current  business  at  home.  To  my  directors 
the  idea  of  giving  up  the  use  of  a  large  amount  of  money 
on  which  we  pay  nothing,  when  it  might  be  loaned  at 
high  rates  of  interest,  seemed  to  be  absurd.  I  hope  they 
are  right ;  time  will  show.'  Time,  and  short  time  at  that, 
did  show.  In  little  more  than  one  year,  this  great 
bank,  which  up  to  the  time  of  its  connection  with  the 
Government  had  been  conservatively  and  profitably 
managed,  was  ruinously,  hopelessly  broken,  and  some 
of  the  directors  who  were  its  borrowers  went  down 
with  it. 


94        kconomic  and  jxjyustrjaj.  j)/:  lci  sign's. 

"after  the  panic  of  1837. 

"  Of  the  reverses  of  1837  I  made  the  following  remarks 
in  my  report  as  Secretary  of  the  Treasury  in  1865  : 

"'The  great  expansion  of  1835  and  1836,  ending  with  the 
terrible  financial  collapse  of  1837,  from  the  effects  of  which 
the  country  did  not  rally  for  years,  was  the  consequence  of  ex- 
cessive bank  circulation  and  discounts,  and  an  abuse  of  the 
credit  system,  stimulated  in  the  first  place  by  Government 
deposits  with  the  State  banks,  and  swelled  by  currency  and 
credits,  until,  under  the  wild  spirit  of  speculation  which  per- 
vaded the  country,  labor  and  production  decreased  to  such  an 
extent  that  the  country  which  should  have  been  the  great 
food-producing  country  of  the  world  became  an  importer  of 
breadstuffs. 

The  balance  of  trade  had  been  for  a  long  time  favorable 
to  Europe  and  against  the  United  States,  and  also  in  favor  of 
the  commercial  cities  of  the  seaboard  and  against  the  interior, 
but  a  vicious  system  of  credits  prevented  the  prompt  settle- 
ment of  balances.  The  importers  established  large  credits 
abroad,  by  means  of  which  they  were  enabled  to  give  favora- 
ble terms  to  the  jobbers.  The  jobbers  in  turn  were  thus,  and 
by  liberal  accommodations  from  the  banks,  able  to  give  their 
own  time  to  country  merchants,  who  in  turn  sold  to  their  cus- 
tomers on  indefinite  credit.  It  then  seemed  to  be  more 
reputable  to  borrow  money  than  to  earn  it,  and  pleasanter 
and  apparently  more  profitable  to  speculate  than  to  work. 
And  so  the  people  ran  headlong  into  debt,  labor  decreased, 
production  fell  off,  and  ruin  followed.' 

"  This  was,  of  course,  a  panic  sharp  and  terrific,  but  it 
was  of  short  duration.  It  was  soon  followed  by  a  lethargy 
under  which  all  the  springs  of  enterprise  and  hopefulness 
were  dried  up.  To  prevent  the  sacrifice  of  property 
under  judicial  decrees,  stay  laws  and  appraisement  laws 
were  enacted  by  many  of  the  States,  which  only  aggra- 
vated the  trouble.  For  long  weary  years  the  lethargy 
continued.  There  was  no  demand  for  anything  except 
the  necessaries  of  life,  and  all  these,  except  clothing,  were 
sold  for  scarcely  enough,  and  in  some  cases  not  enough, 


BALANCE    01-   TRADE   AND    CURRENCY   SUPPLY.      95 

to  pay  the  expenses  of  taking  them  to  market.  I  wit- 
nessed a  sale  in  1839  ^^  the  keeper  of  a  hotel  in  Indian- 
apolis of  oats  at  ten  cents  a  bushel  and  fine  chickens  at 
fifty  cents  a  dozen.  The  same  year  I  saw  thousands  of 
barrels  of  flour  under  the  sheds  of  Suydam,  Sage  &  Co. 
in  New  York  which  they  were  offering  at  $3.50  a  barrel. 
Fat  cattle  were  selling  at  so  low  a  price — -$io  and  $12  a 
head — that  my  brother  thought  that  he  would  pack  a 
few  barrels  of  beef  at  Fort  Wayne  for  the  New-York 
market.  He  did  so,  and  was  drawn  upon  by  his  con- 
signees for  a  part  of  the  expenses  of  transportation  not 
covered  by  the  sales.  From  1837  to  1841  there  was 
nothing  to  break  the  stagnation  but  the  political  cam- 
paign of  1840,  in  which  everybody  became  enlisted  for 
want  of  something  else  to  do.  In  the  fall  of  1841  a 
reaction  began  to  appear.  This  became  decided  in  1842, 
before  the  tariff  of  that  year  went  into  operation,  and  in 
1845  the  country,  chastened  by  adversity,  was  in  the  full 
tide  of  healthy  and  wealth-producing  industry  and  enter- 
prise. This  continued  until  credits  became  again  un- 
wisely expanded  and  speculation  became  rife. 

"the   panic  of    1857. 

"  In  1857  I  '^^'^s  t^^^  President  of  the  bank  in  the  State 
of  Indiana,  and  this  is  a  part  of  what  I  said  about  the 
financial  troubles  of  that  year  in  the  report  from  which  I 
have  quoted  : 

"'The  financial  crisis  of  1857  was  the  result  of  a  similar 
cause  to  that  of  1837,  namely,  the  unhealthy  extension  of  the 
various  forms  of  credit.  But  as  in  this  case  the  evil  had  not 
been  long  at  work,  and  productive  industry  had  not  been 
seriously  diminished,  the  reaction,  though  sharp  and  destruc- 
tive, was  not  general,  nor  were  the  embarrassments  resulting 
from  it  protracted.  Now,  in  both  instances  the  expansion 
occurred  while  the  business  of  the  country  was  upon  a  specie 


96  ECONOMIC  AND   INDUSTKJAl.   DELUSIONS. 

basis,  but  it  was  only  nominally  so.  A  false  system  of  credits 
had  intervened,  under  which  payments  were  deferred,  and 
specie  as  a  measure  of  value  and  a  regulator  of  trade  was 
practically  ignored.  Everything  moved  smoothly  and  appar- 
ently prosperously  as  long  as  credits  could  be  established  and 
continued,  but  as  soon  as  payments  were  demanded  and  specie 
was  in  requisition  distrust  commenced  and  collapse  ensued. 
In  these  instances  the  expansions  preceded  and  contraction 
followed  the  suspension,  but  it  will  be  recollected  that  while 
the  waves  were  rising,  specie  ceased  to  be  a  regulator  by  reason 
of  a  credit-system  which  prevented  the  use  of  it.' 

"  Now,  with  all  due  respect  to  Mr,  Blaine,  I  express 
the  opinion  that  the  apparent  prosperity  which  preceded 
the  revulsion  of  1837,  and  the  real  prosperity  which  pre- 
ceded the  crisis  of  1857  were  not  caused  by  the  tariff, 
and  that  the  reverses  which  followed  were  not  attributable 
to  its  reduction.  If  the  tariff  was  in  any  measure  instru- 
mental in  producing  the  changes,  it  was  in  stimulating  the 
expansion  which  terminated  in  disaster.  In  1857  I  was  a 
believer  in  the  tariff,  and  it  never  entered  my  head  to 
attribute  the  financial  troubles  of  that  year  to  the  changes 
to  which  it  had  been  subjected. 

"  THE    FINANCIAL    TROUBLES    OF    1873. 

*'  The  most  pressing  duty  which  I  had  to  perform  when 
I  became  Secretary  of  the  Treasury  in  1865,  was  to  pro- 
vide the  means  to  pay  the  soldiers,  and  to  meet  other 
pressing  demands  upon  the  Treasury.  This  was  done  in 
the  only  way  it  could  be  done,  by  the  sale  of  temporary 
obligations  which  had  proved  to  be  attractive  to  investors. 
After  this  had  been  accomplished  the  work  of  funding 
these  obligations  was  commenced  and  carried  successfully 
on  until  the  whole  amount — some  thirteen  hundred 
millions  of  dollars— was  converted  into  bonds.  While  this 
work  was  going  on  I  was  under  constant  apprehension 
of  a  financial  crisis  before  it  could  be  completed.  My 
apprehension  was  unfounded,  but  only  as  to  time.  The 
crisis  was  postponed,  and   for  so  long  a  period  that  the 


BALANCE   OF  TRADE  AND    CURRENCY  SUPPLY,      gj 

opinion  generally  prevailed  that  the  vitality  and  pro- 
ductive power  of  the  country  were  so  great  that  the  most 
expensive  war  that  had  ever  been  waged  could  be  con- 
cluded, and  great  expansion  of  credit  could  be  checked 
and  abridged  without  financial  disturbances.  I  have  to 
confess  that  this  was  my  own  opinion,  but  the  same 
causes  which  produced  the  crisis  of  1857  were  at  work, 
and,  as  had  always  been  the  case,  the  revulsion  came 
when  least  expected. 

"When  I  left  London  in  September,  1873,  to  come  to 
the  United  States,  the  financial  skies,  if  not  cloudless, 
were  not  threatening.  The  letters  which  were  received 
by  the  London  firm  from  its  New  York  partners  were 
encouraging ;  and  I  had  no  reason  to  expect  anything 
but  a  pleasant"  visit  to  my  old  home,  and  a  return  to  Lon- 
don under  auspicious  circumstances.  But  on  the  arrival 
of  the  steamship  in  the  outer  harbor,  I  was  met  by  the 
stunning  intelligence  that  my  American  partners  and  the 
correspondents  of  the  Fort  Wayne  banking  house  in 
which  I  was  interested  had  failed  ;  that  all  the  banks  ex- 
cept the  Chemical  Bank,  which  had  weathered  all  storms, 
had  suspended,  and  that  one  of  the  wildest  panics  which 
had  ever  occurred  was  raging  throughout  the  country. 
The  crisis  was  a  terrible  one.  Although  it  came  unex- 
pectedly, it  was  only  the  consummation  of  influences 
which  had  been  long  at  work  beneath  the  financial  hori- 
zon. In  extent,  in  fierceness,  and  disaster  it  resembled 
the  revulsion  of  1857.  It  was  not,  as  Mr.  Blaine  states, 
brought  about  by  the  losses  sustained  in  the  civil  war, 
which  had  been  terminated  eight  years  before,  nor  by  the 
destructive  fires  in  Chicago  and  Boston.  Great  losses 
may  bring  about  what  are  called  hard  times — not  panics. 
It  was  produced  by  an  expansion  of  currency  and  of 
credits,  which  fostered  speculation,  which  rarel}-  fails  to 
terminate  in  financial  trouble." 


CHAPTER  IV. 

PATERNAL  GOVERNMENT  AND  INDUSTRIAL  PROGRESS. 

The  claim  that  import  duties  are  capable  of  exerting 
any  favorable  influence  on  the  quantity  of  our  industrial 
activity  was  examined  in  last  chapter,  and,  I  'venture  to 
believe,  conclusively  refuted.  The  next  inquiry  before  us 
is  into  the  quality  of  that  activity — whether  our  industrial 
system  is  better  developed,  or  better  in  any  way  for  the 
pains  that  have  been  taken  to  give  it  direction.  There  is 
no  self-contradiction  in  admitting  that  governmental  reg- 
ulation cannot  increase  the  amount  of  a  nation's  industry, 
and  in  insisting  at  the  same  time  that  some  regulation  is 
needed  to  insure  the  nation  a  greater  variety  or  a  more 
desirable  kind  of  industry.  I  do  not  care  to  deny  that  a 
government  might  be  imagined,  whose  wisdom  in  devising 
suitable  industries  for  its  people  should  surpass  the  people's 
wisdom  in  deciding  for  themselves  ;  I  admit  that  such  a 
position  involves  no  glaring  absurdity.  But  I  by  no 
means  admit  that  the  benefits  theoretically  possible  to  the 
regulations  of  some  imaginable  government,  are  now  ours 
by  the  regulations  of  the  government  we  actually  have. 
It  is  the  effects  flowing  from  legislation  practically  enacted 
that  we  have  to  consider  ;  and  if  we  find  these  undesirable 
in  the  concrete,  it  need  concern  us  ver}-  little  whether  sim- 
ilar effects  may  or  may  not  be  desirable  in  the  abstract. 

ENCOURAGEMENT  OF  IRON  AND  STEEL  MANUFACTURING. 

The  assumption  that  encouragement  must  necessarily 
encourage,  as  applied  to  tariff  duties  in  behalf  of  home 

gS 


PATERNAL    GOVERNMENT.  99 

industries, is  one  that  is  heedlessly  made  and  admitted.  I 
can  give  several  instances  in  which  it  certainly  does  not, 
and  a  great  many  similar  ones  might  be  given.  On  the 
whole,  it  might  be  more  truly  said  that  the  kind  of  encour- 
agement granted  to  manufactures  is  in  effect  discouraging. 
Chief  among  the  industries  depressed  by  our  protective 
policy  are  those  in  which  iron  and  steel  are  used  ;  and 
none  will  deny  that  these  industries  are  numerous  and 
vitally  important.  It  is  a  matter  of  cold  statistical  fact, 
compiled  from  tables  of  prices  actually  paid,  that  until 
the  last  year  or  two  pig-iron  has  averaged  $10  a  ton,  and 
Bessemer  steel  about  $14  a  ton,  higher  here  than  in 
England.  It  is  a  matter  of  plain  common-sense  that  but 
for  our  import  duties  no  difference  above  cost  of  transpor- 
tation, insurance,  etc. — -perhaps  $3  per  ton — could  have 
existed.  From  these  figures  the  burden  by  which  the 
American  manufacturer  is  handicapped  in  all  lines  of 
export  trade  can  be  readily  computed.  Detailed  consid- 
eration of  these  points  will  appear  in  a  later  chapter — the 
iron  and  steel  question  is  too  important  to  be  dismissed 
with  a  paragraph.  One  example  must  here  suffice,  and 
I  have  not  far  to  look  for  one. 

INSTANCE    FROM   THE   AGRICULTURAL-IMPLEMENT   BUSINESS. 

Experience  in  my  own  business  enables  me  to  furnish 
considerable  testimony  as  to  the  evil  effects  of  govern- 
ment ''  encouragement."  We  manufacture  machinery  on 
which,  to  protect  us  within  the  United  States,  a  heavy 
duty  is  set.  But  this  duty  is  like  that  allowed  on  im- 
ported wheat,  of  no  assistance  whatever  to  the  producer. 
For  we  send  a  large  portion  of  our  manufactures  abroad  ; 
in  the  markets  of  South  America,  South  Africa,  and 
Australia  we  are  compelled,  and  owing  to  advantages  in 
labor  and   machinery,  are  able  to  compete  with  all  other 


lOO         ECONOMIC  AND   INDUSTRIAI.   DELUSIONS. 

producers  in  the  world  without  protection.  I  do  not  need 
to  prove  that  since  we  can  trade  in  those  markets  without 
special  favors  we  have  no  need  of  them  to  keep  our  place 
in  this.  If  we  were  circumstanced  like  the  owners  of 
copper  mines,  for  instance,  with  a  supply  so  firmly  held  in 
few  hands  that  consumers  were  completely  at  our  mercy, 
and  able  to  sell  our  product  year  after  year  to  our  com- 
patriots at  about  what  is  received  for  it  in  London  plus 
the  duty  on  it,  we  might  get  some  advantage  from  protec- 
tion. But  we  could  get  none  without  engaging  in  such  a 
legalized  pillage  of  our  fellow-citizens  as  this  ;  while  the 
cost  to  us  of  this  merely  nominal  guerdon  of  legislation, 
is  higher  prices  on  the  raw  material  of  every  machine  or 
implement  we  put  on  the  market — hence  fewer  and 
smaller  sales. 

The  duty  on  pig-iron,  $6.72  a  ton,  must  be  mainly  paid 
by  the  consumer;  the  furnace  owners,  in  turn,  are  obliged 
to  pay  more  for  their  ore,  owing  to  a  duty  of  seventy-five 
cents  per  ton.  Similarly  with  bar-iron,  duty  about  $18, 
and  with  sheet-,  duty  $60  on  some  forms.  The  price 
of  lumber  is  guarded  by  a  duty  against  any  reduction 
through  importation,  and  all  who  use  it  thus  mulcted  for 
tribute  to  the  lumber  lords.  The  price  of  bituminous 
coal  and  coke  is  advanced  by  a  duty,  while  the  cost  of 
anthracite,  :hough  not  depending  directly  upon  import 
taxes  (since  there  is  none  to  be  obtained  from  abroad), 
is  necessarily  affected  by  that  of  other  fuel.  More  than 
this  :  our  interests  are  closely  dependent  on  those  of  the 
agricultural  calling  generally,  whose  welfare  is  necessary 
to  our  welfare,  and  whose  misfortunes  must  be  ours  also. 
High  tariff  duties  bring  nothing  to  growers  of  corn,  wheat, 
cattle,  and  cotton,  while  increasing  the  cost  of  most  of 
the  things  they  have  to  buy,  and  so  reducing  their  power 
to  purchase  the  tools  the\-  ought  to  have.     Thus  is  our 


PATERNAL    GOVERNMENT.  lOI 

business  affected,  and  what  is  true  of  us  is  true  of  all 
manufacturers  who  are  able  to  produce  goods  for  regular 
export  ;  those  of  clocks,  organs,  and  sewing-machines,  for 
instance.  It  is  true  also,  to  some  degree,  of  the  still  larger 
number  who  do  not  export,  but  would  be  enabled  to  do 
so  were  they  allowed  the  same  advantages  that  their  for- 
eign rivals  have,  of  getting  raw  materials  where  they  can 
get  the  best  choice  of  them.  There  will  be  no  question 
that,  with  this  liberty  permitted  us,  w'e  could  establish  our 
business  in  many  parts  of  the  world  where  we  are  now  at 
a  hopeless  disadvantage,  and  make  a  greater  number  of 
sales  at  home  by  being  able  to  offer  our  wares  cheaper. 
Which  way  our  interests  point  is  therefore  plain  enough. 
I  have  no  occasion  to  deny  that  my  zeal  for  tariff  reform 
in  a  larger  sense  is  strengthened  by  this  consideration  ;  for 
when  one's  own  interest  is  identical  with  that  of  the  great 
mass  of  his  fellow-countrymen,  enlightened  selfishness 
becomes  truest  patriotism. 

EXAMPLES  OF  ENCOURAGING  OTHER  PRODUCTS. 

The  story  has  often  been  told,  how,  for  the  sake  of 
making  a  gratuitous  present  of  the  people's  money  to  the 
owners  of  copper  mines,  we  granted  them  in  1869  the 
power  to  run  up  the  cost  of  all  our  copper  and  brass  ware, 
and  also  how  the  practical  prohibition  of  foreign  copper 
ore  operated  to  break  up  the  smelting  establishments 
along  the  Atlantic  seaboard,  and  turn  all  their  workmen 
adrift ;  the  lesson  is  now  emphasized  by  the  complaints  of 
that  industry,  every  year  more  important  to  civilization, 
of  constructing  and  using  electrical  apparatus,  against  the 
inflated  prices  with  which  this  bounty  to  the  mine-owners 
burdens  it.  The  "  encouragement  "  in  this  case  does  not 
encourage  the  copper-smelting  industry  ;  it  does  not  en- 
courage   the  widely  ramified   and    growing  electrical  in- 


I02         HCONOMIC  AND    INDUSTRIAL    DKIJ/SIONS. 

dustry  ;  it  only  encourages  in  paying  huge  dividends  and 
supporting  an  influential  lobby,  an  industry  entitled  on 
public  grounds  to  far  less  consideration. 

Encouragement  is  ceasing  to  encourage  woollen  indus- 
tries, with  accelerated  speed.  Failures  among  these  manu- 
facturers and  the  dealers  in  wool,  serious  enough  for  some 
years  past,  were  three  times  as  heavy  in  1889  as  in  1888, 
while  the  Mills  Bill  was  under  discussion  ;  and  now  we 
find  many  of  the  sufferers  beginning  a  revolt  against  a 
system  which  adds  so  hugely  to  the  cost  of  their  raw 
materials  and  their  machinery.  I  wish  them  courage  to 
keep  up  the  fight.  The  whole  effect  of  the  system  of  duties 
on  wool  and  woollens  has  been  to  encourage  the  production 
of  shoddy  substitutes  and  of  cotton  goods.  One  wonders 
if  that  may  not  have  been  the  object  of  it.  As  is  well 
known,  it  has  set  many  and  many  a  citizen  of  the  United 
States  to  wearing  cotton  or  shoddy  garm.ents,  who  would 
otherwise  wear  wool;  to  say  nothing  of  the  suffering  from 
insuf^cient  clothing.'  The  duties  are  no  great  encourage- 
ment to  the  wool-grower,  for  when  the  factories  close  his 
market  is  lost  to  him  :  little  wonder,  then,  at  the  con- 
tinued   slaughtering  of    the    flocks   in   the   older    States, 

'  A  striking  confirmation  of  this  view  is  furnished  by  an  analysis  recently 
published  in  the  D7y  Goods  Economist.  Nine  samples  of  hea\^  woollens 
from  five  mills,  controlled  by  members  of  an  organization  which  had  been 
active  in  promoting  the  wool  increase  in  the  McKinley  Act,  were  compared 
with  a  like  number  from  mills  whose  owners  had  favored  free  wool.  The 
latter  samples  showed  an  average  of  3  per  cent,  cotton  ;  the  former,  of  more 
than  half.  These  figures  may  not  prove  that  every  manufacturer  who  con- 
sents to  high  duties  on  wool  is  one  of  those  who  use  more  cotton  than  wool, 
but  they  expose  clearly  enough  the  motive  power  behind  McKinley's  increise. 
No  more  effectual  encouragement  of  cotton  mixture,  than  is  furnished  by 
our  present  tariff,  could  be  contrived  by  the  wit  of  man.  So  far  as  they  in- 
troduce cotton,  the  manufacturers  enjoy  free  raw  material  ;  while  their 
protection,  since  this  cotton  is  all  reckoned  as  wool  in  the  "  compensatory 
duty,"  sometimes  approaches  200  per  cent. 


PATERNAL    GOVERNMENT.  IO3 

which  this  "  encouragement "  fails  to  arrest.  Are  the 
growers  serving  as  cat's  paws  for  the  shoddy  factories  ?  If 
they  have  been  so  used,  it  may  be  predicted  that  they  will 
not  be  much  longer  available :  for  the  courtship  of  them 
in  which  politicians  have  been  so  untiring  has  not  brought 
a  reward  equal  to  their  wishes,  of  late  years,  in  Republi- 
can votes.  Witness  the  sheep-growing  counties  of  Ohio 
in  the  fall  elections  of  1889  and  1890. 

GROWTH    OF    MANUFACTURING    INDUSTRY,    BY    THE    CENSUS. 

Turning  our  view  from  particular  manufactures,  let  us 
look  over  the  general  field.  The  census  reports  give  us 
the  value  of  the  manufactured  goods  of  all  kinds  in  the 
United  States  for  every  tenth  year,  beginning  with  1850, 
when  the  amount  was  ten  hundred  and  nineteen  millions  ; 
in  i860  it  was  eighteen  hundred  and  eighty-six  millions  ;  in 
1870  forty-two  hundred  and  thirty-two,  or  in  gold  valuation 
thirty-three  hundred  and  seventy-eight  millions  ;  and  in 
1880  fifty-three  hundred  and  seventy  millions.  The  pro- 
portion of  increase  for  the  ten-year  interval  from  1850  to 
i860  is  85  per  cent.  ;  from  i860  to  1870,  on  a  gold  basis, 
79  per  cent.;  and  from  1870  to  1880,  59  per  cent.  If  I  had 
not  corrected  the  1870  figures  (dividing  them  by  1.253, 
the  average  currency  value  of  a  gold  dollar  for  that  year, 
and  thus  putting  them  on  the  same  basis  with  the  others), 
this  last  percentage  would  have  been  but  27,  which  is 
less  than  the  increase  of  population  ;  but  the  gold  rate  is 
significant  enough.  When  we  remember  that  the  period 
1850  to  i860  was  one  of  particularly  low  tariffs,  and  that 
we  had  from  1870  to  1880  higher  tariffs  than  for  any  pre- 
vious decade,  the  fact  that  the  former  period  showed  a 
rate  of  increase  so  decidedly  higher  is  worth  taking  into 
account  before  we  admit  that  such  encouragement  en- 
courages.    If  we  take  account  of  the  increase  of  popula- 


104        ECONOMIC  AXD   INDUSTRIAL   DELUSIONS. 

tion,  and  compare  values  of  manufactured  products  per 
head,  all  estimated  in  gold,  we  have  for  1850  $44,  for  i860 
$60,  for  1870  $88,  and  for  1880  $107;  our  percentage  of 
increase  during  the  low-tariff  decade  was  therefore  37,  and 
during  the  high  decade  22.  The  percentage  46,  for  the 
middle  decade,  shows  some  effect  of  stimulation  conse- 
quent on  war  prices  ;  but  this  figure,  it  should  be  observed, 
exceeds  the  37  per  cent,  far  less  than  the  22  percent,  falls 
short.  The  excess  is  partly  due  to  the  acknowledged  in- 
completeness of  the  1870  census. 

If  one  asks  the  Protectionist  for  his  historical  proof  of 
the  advantages  of  protection,  he  will  glibly  recount  two 
or  three  cases  w^here  duties  were  lowered,  causing  Snooks 
&  Sons  to  suspend,  and  will  then  dilate  on  the  miseries  of 
the  few  dozen  hands  thrown  out  of  employment  ;just  asany 
one  who  cared  to  post  himself  could  detail  the  history  of 
selected  instances  among  the  fifty-three  failures  in  the  wool- 
len business  that  were  precipitated  upon  us  during  the  first 
eight  months  of  the  year  1889  by  our  foolish  tariff  policy. 
Without  disparaging  Messrs.  Snooks  &  Sons,  the  effect  of 
the  tariff  on  the  whole  Union  is  immensely  more  impor- 
tant than  that  on  their  firm  ;  and  how  manufacturing  on 
the  whole  w^as  "  ruined  "  by  lower  duties,  the  census  fig- 
ures show.  It  is  just  that  sort  of  "  ruin,"  and  nothing 
worse,  that  the  tariff  reformer  proposes  to  bring  upon  them 
now. 

WHY    THE    MANUFACTURERS    HANG    TOGETHER. 

If  it  be  true,  as  I  have  tried  to  prove,  and  as  I  firmly 
believe,  that  protection  costs  the  manufacturers  them- 
selves, as  a  class,  more  than  it  brings  to  them,  it  is  worth 
while  to  consider  why  so  few  of  them  admit  the  fact. 
That  there  are  but  few  is  undeniable.  But  before  taking 
at  their  face  value  the  claims  of  tliat  "reater  number  of 


PATERNAL    GOVERNMEXT.  105 

manufacturers  who  protest  that  the  poHcy  which  "  pro- 
duces scarcity  "  (as  Hamilton  confessed,)  is  essential  to 
keep  them  going,  let  us  consider  the  case  of  a  business 
whose  false  position  towards  society  will  be  universally  ad- 
mitted. Consider  a  crew  of  counterfeiters,  or  smugglers, 
or  burglars  for  instance.  It  is  so  unquestionably  true  that 
the  energy,  courage,  and  ingenuity  exercised  in  one  of 
these  callings  would  bring  in,  in  the  long  run  and  allowing 
for  all  risks,  a  much  better  return  to  the  possessor  in  a 
calling  not  so  obnoxious  to  the  popular  taste,  that  we  may 
easily  imagine  one  of  the  crew,  who  recognizes  this  truth, 
debating  with  himself  whether  he  would  not  better  take 
his  part  for  the  future  with  society,  and  against  his  pres- 
ent associates,  its  enemies.  Is  it  not  certain  that  his 
decision  will  be  very  much  influenced  by  the  fact  that 
while  his  overtures  may  be  doubtfully  received  by  society, 
which  will  be  slow  to  lay  its  resources  open  to  him,  the 
first  step  that  he  takes  in  opposition  to  his  former  com- 
panions must  convert  friends  into  mortal  enemies,  whose 
vengeance  will  be  whetted  by  desperation  ?  He  may  be 
quite  confident  as  to  the  principle,  and  yet  see  in  its  practi- 
cal application  only  doubtful  advantage  to  himseF  with 
imminent  risk  of  losing  everything. 

I  have  no  disposition  to  class  the  protection-seeding 
manufacturers  with  such  criminals  in  point  of  wickedness; 
neither  would  I  so  class  the  representative  in  Congress 
who  dare  not  content  himself  with  the  applause  of  the 
country  at  large — which  will  come  to  him  in  too  mild 
a  form  to  be  of  much  personal  benefit — and  face  the 
wrath  of  a  few  noisy  constituents — which  will  be  certain 
to  direct  itself  against  him  with  deadly  effect — in  voting 
according  to  his  convictions  and  his  conscience  on  some 
river-and-harbor  job,  or  some  pension  scheme,  for  pil- 
laging  the    Treasury.     I   simply    use   the   illustration   to 


Io6        ECONOMIC  AXD  INDUSTRIAL   DELUSIONS. 

point  a  general  caution  against  accepting  the  statement 
of  any  man,  be  he  never  so  well  informed,  until  it  has  been 
shown  by  what  trammels  he  is  bound,  and  allowance  has 
been  made  for  them.  But  if  I  chose  to  go  further — if  I 
said  that  those  who  clamor  for  continued  protection  have 
more  than  this  in  common  with  vulgar  outlaws,  and  that 
they  are  consciously  banded  for  the  plunder  of  their 
fellows  —  I  could  find  a  justification  in  the  language 
they  use  among  themselves.  I  will  give  an  example. 
As  I  have  already  stated,  some  of  the  wooHen  manu- 
facturers have  just  waked  up  to  the  discovery  that 
they  cannot  work  over  and  sell  to  advantage  materials 
on  which  protection  has  forced  them  to  pay  30  to  80 
per  cent,  advance ;  and  are  now  asking  for  free  wool. 
For  this  the  Neiu  York  Tribune  has  taken  upon  itself  to 
discipline  them,  and  it  goes  promptly  to  the  point.  All 
pretence  that  the  duty  on  woollens  was  imposed  in  the 
public  interest,  and  is  cherished  by  the  people  because 
every  class  is  blessed  by  it,  drops  away  as  swiftly  and 
totally  as  the  Fiend's  disguise  under  the  spear  of  Ithuriel. 
Protection's  oracle  reminds  these  manufacturers  that  the 
wool-raisers  have  votes,  many  more  votes  than  they  them- 
selves can  muster,  and  intimates  quite  distinctly  that  their 
own  protective  bounty  is  likely  to  become  the  first  victim, 
if  it  be  brought  into  the  lists  wuth  the  wool  tariff.  Here 
is  a  perfectly  clear  announcement  that,  though  the  pretext 
of  a  public  aim  is  all  well  enough  for  steering  in  victims, 
it  has  no  force  within  the  ring — -among  the  protected 
themselves.     The  confession  is  complete. 

To  the  manufacturer  entirely  dependent  upon  sales  at 
home  the  threat  to  remove  the  tariff  on  the  goods  he 
makes,  while  maintaining  that  on  his  material,  is  simply  a 
menace  of  utter  destruction.  He  might  argue  with  per- 
fect truth  that  all  the  ends  proposed  by  advocates  of  pro- 


PATERNAL    GOVEKNAtENT.  10^ 

tection  on  principle,  would  be  better  gained  by  preferring 
of  the  two  the  tariff  on  his  finished  goods ;  that  he 
employs  more  labor,  of  a  higher  grade ;  that  his  business 
is  directly  of  service  in  furnishing  a  home  market  for 
the  raw  material ;  that  he  has  more  at  stake,  more  in- 
vested :  but  to  no  purpose,  for  he  well  knows  that  it  is  not 
in  such  a  way  that  tariffs  are  made  and  maintained.  He 
knows  also  that  his  profits  may  depend,  in  important 
measure,  on  special  terms  allowed  for  machinery  and  sup- 
plies by  other  protected  manufacturers.  Knowing  these 
stern  facts,  with  the  margin  between  failure  and  success 
so  narrow  that  almost  any  change  of  present  conditions 
seems  likely  to  imperil  all — knowing  as  he  does  the 
strength  of  his  fetters,  his  unwillingness  to  make  a  mighty 
effort  to  burst  them  is  scarcely  surprising.  Now,  as  in 
1863,  the  establishment  of  freedom  will  bring  with  it  the 
blessing  of  free  speech. 

DIVERSIFYING    OUR    INDUSTRIES. 

An  important  part  is  ascribed  to  tariff  legislation  in 
diversifying  industrial  pursuits,  and  fostering  useful  enter- 
prises that  could  not  succeed  without  it.  Here,  as  in 
many  other  cases,  the  thoughtful  seeker  after  truth  is  in 
danger  of  missing  the  slender  kernel  of  substance  in  this 
claim  for  the  cumbrous  husk  of  exaggeration,  misstate- 
ment, and  reckless  pretence  in  which  it  is  hidden.  With- 
out denying  that  some  small  part  of  the  diversity  of  our 
industries  may  be  due  to  artificial  fostering  in  a  few  special 
cases,  the  thing  most  important  to  notice  in  this  connec- 
tion is  that  by  far  the  greater  part  comes  from  no  such 
source.  The  productions,  such  as  gold  and  silver,  that 
are  not  even  nominally  protected,  with  those  of  the  farm 
and  exportable  manufactures,  whose  nominal  protection 
brings  them  no  real  benefit,  and  the  long  list  of  other 


Io8         ECONOMIC  AND  INDUSTRIAL    nrJA^SIONS. 

productions  whose  real  protection  is  more  than  offset  by 
increased  cost  of  raw  material,  make  up  an  extensive  and 
quite  sufificient  diversity,  and  no  timid  heart  need  faint 
with  apprehension  that,  even  were  commerce  completely 
unshackled,  our  lines  of  business  would  be  seriously  cur- 
tailed. There  was  a  considerable  degree  of  diversity  in 
our  industries  before  we  set  about  protecting  them  at  all. 
Alexander  Hamilton,  first  head  of  the  Treasury  Depart- 
ment, in  a  long  and  careful  report  to  Congress  advocating 
National  encouragement  of  manufactures,  says  signifi- 
cantly that  "  to  all  the  arguments  which  are  brought 
to  evince  the  impracticability  of  success  in  manufacturing 
establishments  in  the  United  States,  it  might  have  been  a 
sufificient  answer  to  have  referred  to  the  experience  of 
what  has  already  been  done  "  ;  and  follows  this  with 
a  good-sized  catalogue  of  the  industrial  enterprises  that 
had  grown  up  into  quite  creditable  activity  under  com- 
plete free  trade,  or  duties  of  5  to  j\  per  cent.  The 
notion  that  the  achievements  of  a  very  poor  nation  of 
some  four  millions,  as  we  were  then,  could  not  be  sur- 
passed by  the  very  rich  one  of  over  sixty  millions  that  we 
are  now,  scarcely  calls  for  discussion. 

ESTABLISHING    NEW    INDUSTRIES. 

The  beneficial  influence  claimed  for  tariffs  in  giving  a 
necessary  start  to  valuable  industries  I  shall  undertake  to 
put  in  the  very  strongest  light  it  will  bear.  Some  years 
ago  the  saws  and  axes  used  in  this  country  came  mostly 
from  Shefifield.  Now  they  are  chiefly  made  here.  More- 
over, they  are  decidedly  better  in  style  and  quality,  and 
decidedly  lower  in  price  than  they  used  to  be.  As  the 
American  saws  and  axes  not  only  completely  command 
the  market  at  home,  but  are  sold  abroad  in  large  quanti- 
ties, they  have  no  occasion  for  protection,  and  w'ant  only 


PATERNAL    GOVERNMENT.  IO9 

cheaper  steel ;  but  we  are  told  that  things  were  very 
different  with  them  at  first.  The  expense  of  starting  the 
manufacture  was  so  heavy,  it  is  stated,  that  it  would  not 
have  been  possible  had  competition  been  free.  Be  it  so. 
I  am  quite  ready  to  admit  an  occasional  instance  of  the 
kind,  for  the  sake  of  argument.  It  is  not  of  the  working 
of  the  tarifT  in  these  instances  that  I  complain,  but  in  so 
many  others  where  no  such  result  is  reached — iron  and 
steel  for  instance,  heavily  protected  for  many  generations^ 
and  still,  if  we  are  to  believe  their  producers,  helplessly 
unable  to  stand  alone, — which  these  scattering  successes 
serve  as  excuse  for  continuing. 

It  is  the  policy  of  every  lottery  to  conspicuously  parade 
the  prizes  it  pays.  After  every  drawing  it  blazons  the 
newspapers  with  the  lucky  numbers,  particulars  as  to 
where  they  were  sold,  who  the  holders  are,  what  delight 
was  given  by  so  large  a  return  from  so  inconsiderable  an 
outlay,  and  whatever  else  may  be  calculated  to  inflame 
the  reader's  imagination,  and  incite  him  to  try  his  own 
fortune.  To  the  ninety  and  nine  who  draw  no  prize,  and 
have  simply  lost  the  ticket's  cost,  no  attention  is  called, 
and  they  are  themselves  willing  enough  to  aid  the  lottery 
promoters  in  covering  them  with  a  kindly  veil  of  oblivion. 
But  the  economist  must  remember  the  losers  along  with 
the  winners,  and  that  the  expense  of  the  institution  to  the 
whole  body  of  ticket-buyers  amounts  to  a  good  deal  more 
than  the  prizes  paid  to  a  few  of  their  number  ;  the  heavy 
operating  charges  of  the  concern,  the  profits  its  promoters 
draw  out  of  it  over  and  above  these,  and  whatever  time 
may  be  taken  from  regular  honest  work  in  procuring  the 
ticket  or  awaiting  the  result.  There  can  be  no  shadow  of 
doubt,  therefore,  that,  as  a  general  rule,  lottery  invest- 
ments do  not  pay.  The  substantial  gains  made  through 
protective  tariffs  must  be   of  the   same  nature  as  those 


no         ECONOMIC  AND   INDUSTRfAT.    />/-:/.  f\'s/ONS. 

drawn  in  a  lottery.  The  risk  of  loss  must  be  large  in 
comparison  with  the  chance  of  gain.  Necessarily  so,  for 
otherwise  the  interference  of  government  would  be  super- 
fluous ;  since  sufTficient  capital  could  be  obtained  from 
private  sources  to  give  the  enterprise  a  start.  In  the  case 
of  the  saw  and  axe  works,  for  example,  if  the  prospect  of 
success  had  at  first  appeared  encouraging  to  men  of  fair 
foresight  and  judgment,  those  men  would  not  less  readily, 
and  much  more  properly,  have  been  found  among  capi- 
talists than  Congressmen,  and  money  to  insure  it  have 
come  from  these  private  investors  than  from  the  public. 
But  people  will  of  course  vote  away  the  money  of  their 
fellow-citizens  more  willingly  than  money  from  their  per- 
sonal pockets.  The  severity  of  the  risk  in  the  great  tariff 
lottery,  however,  appears  in  the  general  result ;  for  every 
dollar  that  is  saved  to  the  community  in  saws  and  axes 
cheapened  and  improved,  ten,  twenty  or  more  are  paid 
on  account  of  inflated  cost  of  iron,  wool,  et  caetera. 

Nor  is  this  all.  Even  were  the  eventual  gain  a  high 
probability,  instead  of  a  precarious  possibility,  there  seems 
something  repugnant  to  justice  in  using  the  strong  arm  of 
government  to  force  the  purchaser  of  a  saw  or  axe  into  a 
business  partnership  with  the  man  that  makes  it,  on  the 
principle  of  tails  he  loses,  heads  the  manufacturer  wins. 
We  take  the  citizen's  money  for  a  private  enterprise  not 
his  own  ;  and  if  ever  a  benefit  comes  of  it  to  any  one  but 
the  protected  manufacturer,  it  comes  to  other  persons 
altogether — the  purchasers  a  generation  hence. 

I  will  not  appeal  for  sympathy  on  account  of  these 
assaults  upon  liberty  and  common  justice,  grave  although  I 
believe  the  evil  to  be.  I  recognize  the  fact  that  the  citizens 
of  my  country  unfortunately  seem  to  be  quite  willing  to 
overlook  all,  if  sufficient  material  gain  can  be  shown  them. 
It  is  necessary,  therefore,  if  we  expect  a  hearing,  that  the 


PATERA^AL    GOVF.RNMF.XT.  Ill 

data  from  which  the  tariff  beneficiaries  would  cipher  out 
a  gain  for  the  pubHc  be  closely  scrutinized  ;  and  especially 
important  to  show  whether  anybody  is  cheated  in  the  way 
these  data  are  manipulated.  I  have  spoken  of  the  ad- 
vantage gained  by  lotteries  in  throwing  a  brilliant  light 
upon  the  prizes  drawn,  and  hiding  from  sight  the  many 
blanks  that  go  for  every  prize.  If,  now,  a  lottery  had  the 
additional  power  allowed  it  of  passing  off  its  blanks  as 
prizes  on  possible  investors,  it  would  be  favored  indeed. 
The  exceptional  success  of  the  tariff  lottery  is  due  to  the 
exercise  of  precisely  that  power  by  its  managers,  as  I 
shall  show  by  a  conspicuous  example. 

INSTANCE    OF    STEEL    RAILS. 

Among  instances  of  the  reduction  of  price  brought 
about  by  the  home  competition  which  it  is  the  pretended 
intention  of  protection  to  incite,  steel  rails  are  sure  to 
figure.  Here  are  the  facts  :  A  high  protective  duty  on 
these  rails  all  through,  $28  per  ton  until  1883,  afterward 
reduced  to  $17,  and  accompanied  by  a  striking  diminution 
in  the  price,  which  ranged  between  $90  and  $100  per  ton 
from  1870  to  1873,  and  has  not  since  been  above  $70. 
For  several  years  past  it  has  averaged  little  above  $30. 
Production  and  use  of  these  rails  both  very  largely 
increased  ;  they  are  now  laid  exclusively,  iron  being 
abandoned.  The  public  has  been  greatly  benefited  by 
these  results,  and  is  instructed  by  the  Protectionist  that 
it  owes  this  benefit  to  his  device  for  stimulating  home 
competition.  If  we  knew  no  other  facts,  the  case  would 
certainly  have  that  look  ;  and  so  long  as  we  depend  on 
the  Protectionists,  we  are  allowed  to  know  no  other.  But 
somebody,  whose  suspicions  were  excited  by  observing 
how  very  few  of  our  trials  of  protection  on  many  hundred 


112         RCONOMIC  AND    INDHSTRIAL   J>Kr.USlOA^S. 

articles  for  a  hundred  years  had  been  followed  by  effects 
analogous,  and  how  loath  the  rail  manufacturers  were  to 
part  with  the  $17  duty,  once  took  it  into  his  head  to  look 
up  the  average  prices  of  steel  rails  in  London,  and  give 
them  in  a  table  side  by  side  with  those  at  the  same  dates 
here.  The  English  price  shows  the  same  diminution  : 
$60  to  $70  between  1870  and  1873,  sinking  to  barely  $20 
in  recent  years.  They  are  now  advancing  in  England  as 
on  this  side.  The  difference  between  the  two  columns  is 
always  in  the  same  direction,  varying  from  $30,  the  whole 
duty,  with  something  added  for  cost  of  carriage — then 
there  were,  of  course,  very  large  importations — for  the 
years  just  before  the  panic  and  those  of  the  revival  (1880 
and  1881),  down  to  $5  only  in  1885,  $4  in  1889,  ^"<^ 
almost  nothing  for  a  few  weeks  of  1890,  when,  owing  to  a 
peculiar  stress  of  demand,  the  English  price  had  a  sharp 
temporary  advance. 

These  facts  put  the  matter  in  an  altogether  different 
light.  What  caused  the  reduction  of  price  in  England  ? 
Not  protection,  certainly,  for  the  English  scorn  protection. 
Not  apprehension  of  competition  from  us,  for  since  prices 
in  our  markets  were  always  above  theirs,  our  mills  had  no 
more  influence  over  English  sales  than  if  they  were  in  the 
moon.  Now,  we  see  in  London  figures  undisguisedly  and 
unmistakably,  the  effect  of  improvements  in  the  Bessemer 
process,  by  which  the  cost  of  making  steel  rails  was  re- 
duced. When  prices  fell  off  more  than  two  thirds  with 
them,  what  else  could  they  possibly  do  on  this  side — 
unless,  indeed,  we  "  protected  "  ourselves  from  this  bless- 
ing by  getting  Congress  to  increase  the  duty  ?  Our  pro- 
ducers could  not  maintain  a  scale  of  prices  much  higher 
than  the  London  prices  with  duty  added,  and  the  table 
shows  that  they  have  not  gone,  on  the  average,  much 
lower.     Instead  of    the  vaunted  effect   of   protection    in 


PA  TEAWA  L    GO  VERNMENT.  1 1  3 

lowering  prices,  we  see  its  real  effect  in  simply  preventing 
them  from  being  lowered,  for  us  in  the  United  States,  as 
far  as  they  would  have  been  without  it.  Knowing  the 
whole  case,  we  see  that  the  alleged  prize  was  in  reality  but 
an  additional  blank. 

INSTANCES    OF    GROWTH    DESPITE    DISCOURAGEMENT. 

How  superfluous  is  that  craven  dependence  on  govern- 
mental pampering  into  which  so  many  productive  indus- 
tries have  fallen,  is  strikingly  shown  when  we  inquire  how 
it  fares  with  one  of  our  industries  which  government  not 
only  endows  with  no  advantage — thus  burdening  it,  like 
gold  mining,  wheat  growing,  etc.,  with  the  support  of  pre- 
ferred industries — but  actually  discriminates  against,  by 
specially  favoring  the  sale  of  foreign  products.  Many  a 
student  of  protection  does  not  seem  aware  that,  in  all  our 
apparent  anxiety  to  foster  everything,  there  is  any  indus- 
try treated  in  so  step-motherly  a  manner.  And  yet  this 
is  exactly  what  our  laws  do  for  literary  composition.  The 
author-industry  in  our  country  depends  of  course  upon 
copyright  for  support  ;  and  when  its  products  are  thrown 
upon  the  market,  they  find  themselves  in  competition  with 
foreign  products  whose  expense  has  been  not  only  not 
enhanced  by  a  duty,  but  greatly  reduced  through  being 
spared  the  charge  of  contributing  to  the  support  of  the 
author.  That  is  to  say,  our  literary  productions  are 
deliberately  handicapped  in  the  competition.  'And  what 
is  the  result  ?  Has  composition  entirely  deserted  us  and 
settled  irrevocably  in  England  ?  On  the  contrary,  as  our 
publishers'  announcements  and  monthly  magazines  show, 
no  industry  in  the  country  has  so  secure  a  future. 

Nor  is  this  a  solitary  case.  Every  manufacturer  of 
capacity  and  enterprise  could  give  instances  only  a  little 
less  striking,  from  his  own  experience,  of  the  stimulating 


114        ECONOMIC  AND   INDUSTRIAT.    DELUSIONS. 

effect  of  similar  obstacles  on  his  faculties  and  productive 
powers.  Hawthorne  lias  vividly  shown  the  difference  in 
his  own  case  between  finding  a  livelihood  in  a  government 
office,  where  all  was  routine  and  certainty,  and  in  the  world 
outside,  where  his  mind  was  tasked  to  discover  work  as  well 
as  to  accomplish  it  when  discovered  ;  and  he  has  given  us 
to  understand  that,  but  for  the  necessity  that  first  threw 
him  on  his  own  resources,  the  world  might  never  have 
known  that  brilliant  series  of  romances  which  gave  him  a 
place  in  the  front  rank  of  our  national  literature.'  Even 
such  a  brain  as  Hawthorne's  was  found  incapable  of 
its  best  service  until  forced  to  it  by  stress  from  outside. 
In  further  testimony  on  the  same  point,  I  may  be  per- 
mitted to  add  a  brief  passage  from  the  history  of  my  own 
business. 

On  first  beginning  to  manufacture  implements  for 
export  we  found,  as  have  so  many  others  in  similar  lines, 
the  margin  of  profit  so  narrow  that  unremitting  vigilance, 
close  and  grinding  study,  were  indispensably  necessary  to 
keep  us  in  the  business  at  all,  compelled  as  American 
manufacturers  are  to  compete  with  makers  abroad  under 
no  extra  charges  for  raw  materials,  and  to  depend  on  their 
competitors  for  the  carriage  of  their  goods.  But  we  con- 
tinued to  export,  and  now  find  the  conditions  no  easier — 
competition  no  less  pressing— far  harder  and  severer 
rather.  Foreign  rivals  still  hold,  thanks  to  our  govern- 
ment, their  advantage  in  cost  of  transportation  and  raw 
materials ;    and    they  have    also    made    improvements  in 

'  "  Oh,  such  assistance  is  the  devil's  wages.  For  it  I  bartered  courage, 
confidence  and  self-reliant  manhood.  While  resting  in  the  arms  of  Uncle 
Sam  I  made  no  progress,  and  would  not  have  produced  the  Scarlet  Letter 
during  the  terms  of  ten  Presidencies — although  the  data  were  in  my  hands 
and  the  plot  in  my  brain,  as  I  idly  wandered  through  the  corridors  of  the 
Custom  House,  relying  for  support  upon  the  little  pile  of  bright  gold  that 
came  to  me  at  the  end  of  each  month." — The  Scarlet  Letter  :  Preface. 


PATERNAL    GOVERNMENT.  II5 

their  manufacturing  facilities.  The  prices  at  which  we 
now  have-  to  sell,  I  should  ten  years  ago  have  thought 
ruinous — in  fact,  quite  impracticable.  The  measures 
forced  upon  us,  the  only  ones  by  which  it  was  possible  to 
keep  a  place  in  the  trade,  were  a  saving  of  a  few  cents  at 
this  point  and  a  few  at  that ;  here  an  improved  machine 
for  increasing  production,  there  an  arrangement  for  a 
more  effective  division  of  labor — "  evolution  by  integra- 
tions and  differentiations,"  in  short — with  the  same  con- 
tinued close  personal  attention  to  every  point.  I  cannot 
profess  to  have  enjoyed  this  discipline.  People  do  not 
always  enjoy  what  is  good  for  them.  But  experience  has 
helped  me  to  realize  how  impossible  it  is  to  make  a  strong 
man  by  feeding  him  like  a  baby  from  a  spoon.  An  occa- 
sional test  of  this  kind,  I  grant,  may  not  prove  as  a 
general  principle  that  production  thrives  best  under 
positive  discouragement,  but  it  annihilates  the  cowardly 
pretence  that  to  a  vigorous,  keenly  inventive  people 
the  nursing-bottle  must  be  forever  an  absolute  necessity. 
Industries  can  be  saved  without  it. 

SUPPOSED    CAUSE    OF    OUR    INDUSTRIAL    PROGRESS. 

We  are  now  ready  to  rate  at  its  just  value  the  assump- 
tion that  the  progress  of  our  country  and  its  present  pros- 
perity are  in  any  degree  due  to  restrictions  on  trade.  I 
believe  the  exact  opposite  to  be  true,  so  far  as  the  ques- 
tion enters  at  all  ;  our  progress  and  prosperity  are  owing 
to,  dependent  on,  an  exemplification  of,  and  an  argu- 
ment for,  free  trade  in  its  most  unrestricted  form.  Over 
a  region  as  large  as  all  Europe,  this  is  guaranteed  by  our 
national  Constitution  ;  and  our  leading  difference  from 
the  Old  World  is  in  having  so  large  an  area  within  which 
trade  is  absolutely  free.  As  if  to  furnish  the  most  con- 
clusive  refutation   of  the  theories  of  the  Protectionists, 


Il6        ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

their  pet  maxim,  tiiat  trade  may  be  safely  permitted  along 
the  meridians  but  must  be  jealously  watched  and  re- 
strained around  the  parallels,  is  met  by  the  fact  that  not 
only  is  the  greatest  extent  of  our  country  from  east  to 
west,  but  by  far  the  greatest  portion  of  our  trade,  that  for 
which  our  trunk  lines  of  railway  are  built,  is  carried  on  in 
those  directions.  Their  silly  notion  that  a  nation  must  be 
economically  favored  for  all  kinds  of  production  when  it 
pays  low  prices  for  labor,  meets  its  death-blow  in  the  com- 
parison of  wages  and  products  throughout  the  United 
States.  Indeed,  there  is  hardly  a  "  principle  "  that  these 
wiseacres  lay  down  with  owl-like  gravity  for  the  regulation 
of  trade  between  countries,  that  is  not  refuted  by  the  ex- 
perience of  trade  within  our  own  country.  Nor  do  the 
most  of  them  in  these  days  seriously  contest  this.  They 
cheerfully  admit  the  breaking  down  of  their  principles,  as 
applied  to  commerce  between  our  States.  But  once 
across  an  imaginary  line,  find  bunting-strips  of  a  different 
color  and  pattern  waving  over  public  buildings,  and 
presto  !  all  the  laws  of  business  dealing  receive  a  radical 
change  in  character.  The  same  devices  that  before  were 
folly,  now  become  wisdom. 

That  our  progress  and  prosperity  are  advanced  by  the 
large  measure  of  free  trade  permitted  us,  rather  than  by 
the  contrivances  of  legislation  to  keep  that  measure  incom- 
plete, is  a  view  so  firmly  founded  in  common-sense  and 
supported  by  experience  that  no  doubt  would  be  felt 
about  it  except  for  the  vehemence  of  assertions  made  to 
the  contrary.  But  since  it  is  often  doubted,  and  even 
denied,  it  should  of  course  be  put  to  the  fairest  trial  we 
can  devise.  What  facts  have  Ave  to  help  us  in  deciding 
whether  we  w^ould  be  better  or  worse  off,  if  the  methods 
that  work  so  successfully  within  and  across  State  lines 
were  extended  to  trade  beyond  our  national  borders? 


PATERNAL    GOVERNMENT.  11/ 

We  evidently  cannot  depend  for  an  answer  exclusively 
on  our  own  country.  Though,  as  I  have  already  shown, 
its  progress  in  manufacturing  enterprises  was  proportion- 
ately greater  during  a  decade  of  lower  tarifTs  than  during 
a  decade  of  higher,  it  may  not  unreasonably  be  argued 
that  this  test  is  not  conclusive,  seeing  that  the  country 
grows  into  different  conditions  from  decade  to  decade. 
Let  us  then  take  two  different  countries  for  the  same 
period  of  time,  circumstanced  as  nearly  as  possible  alike, 
and  like  our  country,  one  following  the  high-tariff  prin- 
ciple and  the  other  that  of  low  tariffs  for  revenue  only, 
and  let  us  examine  and  estimate  their  relative  prosperity. 

MEXICO    AND    NEW    SOUTH    WALES. 

If  any  country  on  the  globe  ought  to  rejoice  in  the 
most  luxuriant  industrial  progress,  with  manufacturing 
establishments  springing  up  thick  on  every  hand,  and 
happy  laborers  drawing  ample  wages,  that  country  is 
assuredly  Mexico.  For  an  inspection  of  the  statistics 
from  several  of  its  ports  of  entry,  given  in  our  consular 
reports,  shows  that  the  duties  paid  foot  up  to  at  least 
half,  on  an  average,  of  the  value  of  the  goods  imported. 
Leaving  out  of  view  the  privilege  exercised  by  the  sepa- 
rate States  of  that  republic  to  pile  on  their  little  addi- 
tional freight  of  duty  to  all  goods  crossing  their  confines, 
we  see  in  the  federal  customs  alone  a  perfection  which 
even  our  own  country  has  not  reached  ;  the  average  ratio 
of  duties  paid  at  our  ports  to  the  value  imported  is  less 
than  one  third.  Mexico  ought  then,  as  I  have  said,  to 
surpass  us  in  industrial  development.     Does  it  ? 

If  any  country  on  the  globe  ought  to 'be  steeped  in  the 
slough  of  hopeless  penury  and  ruin,  with  a  laboring  class  but 
a  step  above  beggary,  that  country  is  assuredly  the  great 
colon\'  of  New  South  Wales,  on  the  South  Pacific  Ocean. 


Il8        ECONOMIC  AND    INDUSTRIAL   DELUSIONS. 

For  its  whole  tariff  list  consists  of  barely  eiglity  articles ; 
everything  else  is  free,  and  the  world  challenged  to  "  inun- 
date "  it  with  a  deluge  of  goods,  as  cheap  as  ever  they  can 
be  made.  Further  to  show  its  sufferings  under  this  fear- 
ful calamity,  the  same  consular  reports  give  a  value  of  the 
customs  receipts  only  about  a  twelfth  of  the  total  imports  ; 
and  if  we  leave  out  the  principal  sources  of  revenue,  from 
spirits,  wines,  beer,  tobacco,  and  tea  (where  the  duty  is 
manifestly  without  thought  of  any  sort  of  protection)  the 
customs  fall  off  one  half,  and  the  ratio  to  the  remaining 
imports  becomes  less  than  a  twentieth.  And  where  is  the 
woe  and  disaster  brought  on  New  South  Wales  by  this 
policy  ?  The  reports  show  not  a  trace  of  it.  That  colony 
is  not  only  the  most  progressive  of  the  whole  Australian 
system,  in  manufacturing  as  in  other  enterprises,  but  it  is 
almost  unrivalled  in  the  whole  world,  in  its  rate  of  wages 
and  development  for  the  last  twenty  years.  Parts  of  our 
country — notably  the  new  States  opened  to  us  by  the 
Northern  Pacific  Railway — may  surpass  it,  but  no  region 
as  a  whole,  under  a  single  revenue  system,  bears  any  com- 
parison. 

Mexico  and  New  South  Wales  have  many  points  of 
resemblance  ;  both  are  rich  in  mineral  store,  both  have 
some  fields  of  luxuriant  fertility  and  some  arid  districts 
hardly  better  than  deserts,  both  are  comparatively  new 
and  sparsely  inhabited.  Mexico  indeed  has  the  advan- 
tage in  geographical  position,  variety  of  climate  and  prod- 
ucts. It  cannot  be  denied  that  the  resulting  difference 
is  in  a  direction  exactly  opposite  to  that  required  by  the 
fancies  of  the  Protectionists.  But  Protectionists  never  try 
to  meet  points  of  this  kind,  and  it  is  difficult  indeed  to 
imagine  how  they  could  meet  them.  There  is  a  great 
difference  in  character  of  population,  to  be  sure,  between 
the  two,  but  stress  could  hardly  be  laid  by  our  protective 


PATERNAL    GOVERNMENT.  119 

friends  upon  that  particular  ;  for  I  should  at  once  chal- 
lenge them  to  point  out  in  what  respect  they  think  the 
character  of  the  people  inhabiting  the  United  States  in- 
ferior to  that  of  their  Australian  kindred,  that  the  former 
would  have  scored  a  failure  with  the  fiscal  policy  under 
which  the  latter  have  attained  so  splendid  a  success. 

NEW    SOUTH    WALES    AND    VICTORIA. 

I  am  quite  content,  though,  to  abide  by  the  result  of  a 
fair  comparison  between  free-trade  New  South  Wales  and 
the  protected  country  most  closely  akin  to  it :  its  next 
neighbor,  the  colony  Victoria,  part  of  itself  until  1 85 1 .  The 
latter  territory,  in  the  days  of  its  first  independence,  was 
the  Avorld's  pocket.  Its  mountains  poured  out  gold  in 
streams  so  rich  that  the  uncouth  names  of  Bendigo  and 
Ballarat  suddenly  replaced  as  symbols  of  vast  wealth  the 
older  Ormus  and  Golconda.  Under  this  stimulus  the 
colony  bounded  forward  like  a  restive  steed  ;  with  less 
than  a  third  the  population  of  New  South  Wales  when 
they  separated,  it  soon  pushed  far  ahead,  and  had  still  by 
the  last  enumeration  a  slight  excess  of  inhabitants.  But 
as  early  as  1881,  in  its  volume  of  imports  and  of  exports, 
it  was  overtaken  by  its  sister,  as  it  will  be  before  long  in 
population  also.  The  proud  pre-eminence  given  Victoria 
by  the  unparalleled  richness  of  her  gold-mines  passed 
from  her  when  these  became  more  difficult  to  work,  and 
the  system  of  high  tariffs  that  she  adopted — high  as  com- 
pared with  other  Australian  colonies,  that  is,  extending 
to  a  thousand  articles,  with  ad  valorem  duties  mounting  as 
as  high  as  25  per  cent,  (it  would  be  called  stark  free  trade 
if  proposed  in  this  country ) — has  not  improved  her  relative 
condition.  I  have  just  been  looking  over  a  table  of  the 
import  and  export  trade  of  these  two  colonies,  beginning 
with    1873.     The   low  duties  of  New   South  Wales  were 


I.?0         ECONOMIC  AND   INDUSTRIAL    DK/J'SIONS. 

adopted  in  1871,  and  the  high  scale  of  Victoria  a  few- 
years  earHer.  Each  figure,  for  the  latter  colony,  stands 
steadily  at  about  fifteen  millions  sterling,  oscillating  to  a 
few  millions  above  and  below,  but  not  on  the  whole  in- 
creasing, down  to  the  year  1886,  at  least.  In  the  sister 
colony  the  amounts  rise  from  eleven  or  twelve  millions 
for  1873  and  1874,  to  seventeen  millions  for  1881,  and 
about  nineteen  for  1882,  and  I  find  from  other  sources 
that  there  has  been  no  backset  since. 

Here  we  have  the  facts.  Are  they  not  decisive  as  to 
the  influence  of  high  and  low  duties  ?  Our  own  race  and 
kindred,  in  a  country  to  a  great  extent  like  our  own,  have 
been  experimenting  for  our  benefit,  quite  as  if  that  were 
their  declared  object ;  making  it  unnecessary,  if  we  only 
keep  our  eyes  open  to  what  they  have  found  out,  for 
us  to  be  at  the  vast  expense  of  trying  the  experiments 
for  ourselves.  And  the  result  of  this  practical  test  being 
so  unmistakably  in  favor  of  free  trade,  why  should  we 
not  let  it  satisfy  us  that  our  progress  is  due  rather  to  the 
large  measure  of  unrestricted  trade  that  we  enjoy  than 
to  our  not  having  it  larger? 

Before  leaving  the  theme,  I  ought  perhaps  to  mention 
two  matters  of  minor  detail :  first,  that  New  South  Wales 
has  more  than  three  times  the  area,  and  gives,  therefore, 
much  more  room  for  growth  ;  second,  that  in  grazing 
territory,  and  in  all  kinds  of  mineral  wealth,  except  the 
one  important  metal,  gold,  it  is  far  richer.  But  no  true 
Protectionist  would  pay  any  attention  to  matters  of  this 
kind,  for  if  he  did  he  would  be  obliged  to  allow  for  the 
the  analogous  state  of  things  in  the  United  States,  and 
could  not  ascribe  our  favorable  condition  entirely  to  our 
scheme  of  taxation.  I  see  no  resource  for  him  except  to 
bolster  up  his  theory  by  some  other  equally  fanciful ; 
that  the  course  of  trade,  for  instance,  like  that  of  the  sea- 


PATERNAL    GOVERNMENT.  121 

sons,  \\\  some  way  reverses  itself  on  crossing  the  equator. 
Do  not  understand  me,  though,  as  saying  that  protection 
actually  has  recourse  to  this  hypothesis  to  explain  tliL- 
facts  with  regard  to  New  South  Wales.  In  truth,  protec- 
tion never  explains  them  at  all.  It  keeps  mouse-quiet 
about  these,  the  best,  if  not  the  only,  tests  by  actual 
fact  to  which  its  theory  has  been  put ;  it  hopes  that 
people  will  know  nothing  of  them,  and  will  accept  its 
harsh  brayings  as  a  perfect  substitute  for  information. 
In  many  years'  reading  of  the  Nezv  York  Tribune,  I 
have  happened  upon  but  one  allusion  to  the  economic 
history  of  that  colony  ;  it  was  very  brief,  and  little  more 
than  a  shallow  misstatement. 

In  the  federation  of  Australian  commonwealths  now 
forming,  it  is  quite  probable  that  the  adopted  revenue 
system  will  be  more  like  that  of  the  majority  of  them 
than  that  of  New  South  Wales.  No  friend  of  the  latter 
colony  would  advise  it  to  remain  out  of  the  federation  on 
that  account;  there,  as  with  us  in  1861,  union  is  more 
important  than  small  taxation  and  large  commerce.  But 
even  though  this  prediction  should  be  carried  out,  and 
that  flourishing  colony  should  abandon  for  a  time  the 
truer  economic  policy,  its  present  example  will  none  the 
less  remain  ;  nor  will  its  temporaiy  defection  throw  any 
more  doubt  upon  its  present  guiding  principle  than  did 
that  of  the  children  of  Israel  in  the  wilderness. 

THE    REAL    CAUSE. 

Economic  principles  are  far  more  than  negations,  and 
yet  the  discussion  of  Economic  Delusions  has  necessarily 
a  negative  tendency.  It  has  led  me  to  fill  many  pages  in 
considering  the  spurious  causes  alleged  for  our  industrial 
progress,  and  to  dismiss  the  true  cause  with  a  single  sen- 
tence.    But  no  more  is  needed.     The  good  seed  fails  not 


122         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

to  sprout,  and  grow,  and  thrive,  without  further  care  from 
the  husbandman,  when  false  growths  are  uprooted  in  pre- 
paring the  soil.  The  whole  prospect  is  seen  at  once 
when  the  fog  is  blown  away.  In  the  first  place,  nature 
has  done  much  for  us,  and  people  can  always  grow  richer 
in  a  rich  country  than  a  poor  one ;  in  the  second,  the  fact 
that  the  colonies  of  Australasia,  with  those  of  South 
Africa  and  along  our  northern  border,  are  sharers  in  the 
same  progress,  admits  only  the  explanation  that  it  has  a 
predilection  for  nations  of  Anglo-Saxon  stock. 


CHAPTER  V. 

FOREIGN   COUNTRIES   AS   COMMERCIAL   RIVALS. 

Powerful  as  are  the  reasons  in  favor  of  peace  among 
the  nations  which  make  up  the  human  family,  it  cannot 
be  denied  that  commercial  rivalry  may  and  must  exist. 
There  is  no  thought  of  arousing  between  different  na- 
tions any  higher  degree  of  the  altruistic  or  self-denying 
spirit,  than  the  inhabitants  of  any  one  of  them  are  capable 
of  maintaining  toward  one  another ;  and  complete  do- 
mestic peace  has  for  centuries  been  found  compatible 
with  a  very  keen  business  rivalry.  The  man  of  business 
whose  first  aim  in  life  is  to  keep  abreast,  or  if  possible  ahead, 
of  all  competitors,  has  no  hostility  toward  them  on  that 
account,  and  does  not  busy  himself  in  seeking  means  to 
harass  or  disable  them  ;  but  each  is  conscious,  even  in 
his  eagerness  to  be  first  at  the  goal,  of  the  important  inter- 
ests that  all  have  in  common,  which  amicable  co-operation 
is  needed  to  secure,  and  which  embittered  enmity  must 
sacrifice.  Every  business  rival  is  for  certain  purposes  an 
ally.  Exactly  what  those  purposes  are,  and  at  what  point 
competition  should  give  place  to  co-operation,  is  some- 
thing for  experience  and  enlightened  judgment  to  deter- 
mine. It  is  enough  here  to  note  the  significant  fact  that, 
in  spite  of  the  activity  of  competition  in  our  day,  the 
field  of  co-operation  has  been  growing  wider  with  advan- 
cing civilization  ;  and  that  it  has  already  begun  to  spread 
beyond  national  frontiers. 

123 


124        ECONOMIC  AMD  INDUSTRIAL   DELUSIONS. 

There  arc  more  ways  than  one  of  confronting  our 
foreign  competitors.  We  may  study  their  methods,  for 
instance  ;  find  how  far  their  success  or  their  failure  is  due 
thereto,  by  the  test  of  comparison  between  countries  em- 
ploying and  countries  not  employing  such  methods,  and 
be  prepared  to  guide  our  own  course  accordingly.  This 
way  is  not  without  practical  difificulties  ;  for  the  deter- 
mination which  method  has  contributed  to  the  success  or 
failure,  and  which  has  been  practically  inert,  when  many, 
as  is  usually  the  case,  have  been  in  operation  at  the  same 
time,  presents  often  a  quite  difificult  problem.  Far  plainer 
and  easier  is  a  second  plan  :  simply  to  do  the  thing  that 
our  rival  does  not  want  us  to  do  ;  keep  out  of  every 
combination  that  he  wants  us  to  enter,  and  assume  that 
every  recommendation  he  makes  to  us  is  precisely  op- 
posed to  our  interest.  Every  one  will  confess  the  superior 
simplicity  of  this  procedure  ;  it  requires  almost  no  reflec- 
tion in  the  carrying  out,  and  the  data  on  which  it  depends 
are  very  readily  ascertainable. 

GOVERNING     OUR     POLICY     BY     "  WHAT     ENGLAND     DOES     NOT 

WANT." 

It  is  reason  enough  for  not  opening  our  ports,  we  are 
often  told,  that  England  wants  us  to  do  so.  In  warfare, 
when  a  combatant  on  the  defensive  finds  out  what  his 
enemy  wants  him  to  do,  he  naturally  does  the  opposite, 
and  a  state  of  warfare  in  the  industrial  field  is  assumed 
by  Protectionists  as  the  normal  condition  of  nations. 
My  prepossessions  would  be  all  against  this  view,  even  if 
I  had  made  no  study  of  the  facts  ;  for  I  have  seen  so 
plainly  the  workings  of  the  rival  principles  of  Enmity 
and  Amity  in  other  fields.  Can  any  one  try  to  picture 
the  condition  of  things  when  private  war  and  the  ven- 
detta,  now   left  to    remote  and    semi-barbarous    regions, 


FOREIGN  COUNTRIES  AS  COMMERCIAL  RIVALS.      125 

were  the  rule  throughout  Christendom,  and  feel  any 
doubt  as  to  the  effect  of  the  Protectionists'  assumed  nor- 
mal state  of  warfare,  among  citizens  within  the  state  ? 
Human  nature  is  not  so  different  in  lesser  aggregates  and 
in  larger,  that  the  kind  of  treatment  found  totally  un- 
suited  to  dealing  with  men  a  few  dozen  or  hundred  miles 
off,  could  gain  a  new  character  and  become  the  best  kind 
for  people  a  few  thousand  miles  ofT.  That  such  an  as- 
sumption and  such  a  practice  are  hopelessly  in  conflict 
with  the  Golden  Rule,  is  a  matter  of  course,  but  I  need 
lay  little  stress  on  this.  A  method  of  warfare  that  dam- 
ages those  conducting  it  twice  as  badly  as  the  foe,  a 
weapon  that  gives  twice  as  severe  a  wound  in  kicking 
back  as  its  missiles  give  to  those  they  hit,  is  one 
whose  use  we  should  regard  as  folly,  though  we  gave  no 
thought  to  the  precepts  of  Christianity, 

Let  us  consider  how  much  importance  should  be 
allowed  to  England's  wishes  about  our  policy,  before 
raising  any  question  as  to  what  those  wishes  are.  Is 
there  after  all  any  good  reason  why  we  need  pay  them 
any  practical  attention  ?  Suppose  that  Doe  and  Roe  are 
two  village  storekeepers,  and  that  Roe  is  able,  having 
either  more  enterprise  or  easier  access  to  the  supply,  to 
sell  his  customers  a  certain  line  of  goods  20  per  cent, 
cheaper  than  Doe.  Further  suppose  that  Doe  has  the 
village  boys  on  his  side,  and  succeeds  in  persuading  them 
to  pelt,  hoot  at,  and  otherwise  make  it  uncomfortable  for 
those  dealing  at  Roe's  store,  with  the  view  of  forcing 
purchasers  to  his  own  ;  that  he  obtains  "  protection,"  in 
other  words.  Roe  will  be  altogether  likely  to  complain, 
and  manifest  quite  a  strong  desire  that  his  customers  shall 
have  as  good  a  chance  as  those  of  Doe.  The  question 
is,  should  that  desire  of  Roe's,  however  powerful,  be 
taken  as  an   indication  that  the  annoyances  to  his  cus- 


126        ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

tomcrs  are  a  public  service,  and  ought  to  continue  ? 
How  mucli  practical  difference  would  it  make  if  the  two 
storekeepers  were  separated  by  water  instead  of  land, 
and  how  much  more  if  the  water  happened  to  be  salt  ? 
All  have  observed  the  efforts  of  large  mercantile  con- 
cerns to  drum  up  custom,  but  who  accepts  the  fact  that 
they  thus  show  a  strong  desire  for  his  trade,  as  a  proof 
that  he  would  find  his  interest  in  trading  with  some  one 
nearer  by  ?  People  are  more  apt  to  act  the  opposite  way. 
They  prefer  to  deal  with  those  anxious  to  sell  to  them, 
believing  that  the  keener  the  anxiety  the  better  the  terms 
to  be  had. 

Free  trade  between  this  country  and  England  could 
not  possibly  be  more  advantageous  to  her  than  to  us 
unless  her  dealers  were  sharper  at  a  bargain  than  ours,  so 
that  we  failed  to  get  as  much  money's  worth  as  we  gave. 
That  we  labor  under  this  disadvantage,  I  will  not  admit. 
I  am  quite  ready  to  trust  my  countrymen  in  any  contest 
of  the  kind  to  which  the  English  may  summon  them.  A 
sort  of  hierarchy  or  aristocracy  among  industries,  under 
which  those  now  followed  in  England  have  a  merit  en- 
tirely out  of  proportion  to  the  pecuniary  return  they 
bring,  seems  to  have  been  conjured  up  by  the  protective 
imagination.  The  fancy  is  not  an  altogether  harmless 
one,  seeing  that  we  cannot  discriminate  in  favor  of  one 
kind  of  labor  without  oppressing  those  who  live  by 
some  other. 

CONTRAST  BETWEEN  THE  REAL  AND  THE  FANCIED  ENGLAND. 

Unaffected  as  any  rational  mind  need  be  by  the 
strength  or  feebleness  of  England's  desire  for  free  trade 
with  us,  it  seems  nevertheless  worth  while  to  expose  the 
exaggeration  with  which  that  desire  is  popularly  distorted. 
It  is  an  interesting  contrast,  that  between  the  England  of 


FOREIGN  COUNTRIES  AS  COMMERCIAL  RIVALS.      12/ 

the  Protectionist  teaching  and  the  England  of  sober  fact. 
The  former  is  consumed  with  a  feverish  sohcitude  over 
our  tariff  legislation,  and  breathlessly  awaits  the  result  of 
every  general  election  in  our  country  ;  the  latter  knows 
so  little  of  the  affairs  of  her  kindred  here  that  few  of  her 
inhabitants  are  free  from  serious  misinformation  on  im- 
portant points,  and  her  newspapers  give  ten  or  twelve 
paragraphs  to  any  leading  European  nation  for  every  one 
given  to  ours — even  while  we  are  holding  elections.  The 
first  is  so  zealous  for  the  removal  of  our  import  duties 
that  she  pours  out  untold  gold  every  year  to  promote  it, 
the  agent  of  its  distribution  being  a  knot  of  insidious 
plotters  known  as  the  "  Cobden  Club  "  ;  the  second — if  we 
confine  our  attention  to  that  fiftieth  part  of  its  number 
that  knows  or  cares  anything  about  our  tariff  laws — in- 
cludes all  shades  of  opinion  from  satisfaction  with  them 
as  they  stand,  as  the  strongest  guaranty  of  their  own 
commercial  supremacy,  to  disgust  at  the  multifarious 
annoyances  they  cause,  while  her  Cobden  Club  is  only 
an  association  for  publishing  as  widely  as  possible  the 
truth  that  made  her  free,  named  after  one  of  the  most 
earnest,  self-sacrificing,  and  admirable  practical  philanthro- 
pists of  the  century,  and  not  in  command  of  much  money 
from  any  source.  The  one  is  unremitting  in  her  efforts — 
always  hectoring  weak  countries,  when  she  is  not  bribing 
strong  ones,  with  the  ever-present  object  of  securing  the 
admission  of  her  manufactures  ;  the  other  has,  freely  and 
without  a  struggle,  granted  to  her  colonies  the  privilege 
of  putting  as  high  duties  as  they  please  on  merchandise 
from  her  own  ports.  It  may  not  be  pleaded  that  this  privi- 
lege was  forced  from  her  in  any  way,  for  the  high-tariff  party 
has  never  been  strong  enough  to  throw  any  of  her  colo- 
nies into  rebellion,  even  when  it  formed  a  large  majority. 
Notwithstanding  the  general  practice  in  those  colonies  of 


128         RCOXOMIC  AND  INDUSTRIAL    />/■:/. rs/ONS. 

sui)i)()rtin<^  local  govcrnmciUs  by  duties  oil  imports,  there 
is  a  strong  party  for  freer  trade  in  all  of  them,  which 
party,  had  loyalty  to  the  mother  country  been  thrown  into 
the  balance  on  its  side,  would  certainly  have  prevailed 
everywhere.  When  we  contrast  this  liberal  treatment  of 
her  dependencies,  entered  upon  after  she  had  declared  for 
free  trade,  with  her  course  before  the  year  1846 — the  op- 
pression of  industries  this  side  the  Atlantic  that  formed 
no  inconsiderable  motive  in  driving  our  own  people  into 
revolution,  the  repression  in  Ireland  whose  penalty  she 
has  since  been  sharing  with  that  ill-starred  isle,  and  finally 
the  disgraceful  triumph  in  the  Chinese  Opium  War,  which 
has  the  one  redeeming  trait  of  mitigating  our  own  morti- 
fication at  the  equally  disgraceful  triumph  which  our 
country  won  from  an  unprovoked  raid  on  a  weaker,  at 
near  the  same  time — in  this  light  it  begins  to  seem  as 
though  the  reform  that  her  corn-law-repeal  movement 
brought  her  was  less  a  modification  in  fiscal  policy  than  a 
radical  regeneration.  To  forget  that  England  has  out- 
grown their  own  narrow  and  shortsighted  maxims,  and 
to  suspect  her  of  following  them  still  in  her  national 
policy  to-day,  is  a  misconception  quite  worthy  of  Pro- 
tectionists. 

I  have  not  denied  that  the  prevailing  sentiment  among 
our  kin  beyond  sea  is  in  favor  of  increased  commercial 
intercourse  with  our  country,  and  I  may  not  undertake  to 
deny  it.  I  very  willingly  concede  the  sentiment ;  it  is 
strongest  in  the  best  and  wisest  Englishmen,  and  the 
nature  of  it,  as  held  by  Cobden  and  Bright,  Gladstone 
and  Morley,  is  precisely  that  of  the  satisfaction  felt  by  all 
classes  in  our  country  at  emancipation  in  Brazil — equally 
magnanimous  and  unselfish.  Business  reasons  are  not 
wanting,  in  addition  to  the  natural  wish  of  generous 
people  to  see  others  free  of  the  toils  from  which  they  so 


FOREIGN  COUNTRIES  AS  COMMERCIAL  RIVALS.       1 29 

lately  achieved  their  own  deliverance,  but  in  these  a  care- 
ful examination  finds  no  comfort  for  Protection.  Remem- 
bering that  it  is  impossible  to  protect  an  industry  of  our 
own  against  other  nations  without  at  the  same  time  and 
in  just  the  same  measure  protecting  some  foreign  industry 
against  ourselves  ;  remembering  that,  as  a  rule,  every  sale 
which  the  English  are  enabled  by  lower  duties  to  make  in 
our  country  must  be  balanced  by  the  sale  of  one  of  our 
products  outside  in  competition  with  an  English  product, 
we  can  discover  in  their  desire  to  see  our  ports  opened 
only  a  firm  conviction,  supported  by  experience,  that 
there  is  more  profit  in  increased  facilities  for  trade,  gener- 
ally speaking,  than  can  be  lost  through  a  little  additional 
competition.  If  English  desires  are  worth  our  attention 
at  all,  this  is  the  lesson  we  ought  to  read  in  them. 

SOME    FOREIGN    COMMERCE    NECESSARY. 

If  the  alpha  and  omega  of  wisdom,  in  dealing  with 
foreigners  as  commercial  rivals,  is  after  all  not  found  in 
doing  the  things  they  want  us  not  to  do,  and  if  we  are  to 
profit  by  their  example  in  using  the  methods  by  which 
they  have  attained  their  successes,  it  will  be  necessary  to 
study  which  method  has  been  the  most  important  con- 
tributor to  success.  Some  countries  have  found  a  consid- 
erable sale  for  their  products  abroad,  after  concluding 
commercial  treaties  especially  providing  for  such  sales 
with  the  countries  where  they  are  made.  Some  have 
used,  for  the  same  end,  the  device  of  encouraging  the 
development  of  the  means  of  transportation  in  their  pos- 
session by  subsidies  to  merchant  vessels.  Some  have 
thought  the  end  best  attained  by  a  general  removal  of 
restrictions  upon  their  commerce.  Which  is  the  method 
best  adapted  to  success  ? 
9 


T30        ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

The  success  here  spoken  of  is  that  indicated  in  sales  of 
our  industrial  products  abroad,  and,  incidentally  thereto, 
in  the  development  of  that  portion  of  our  mercantile 
marine  used  in  foreign  trade.  It  requires  some  effort  in 
overcoming  a  natural  hesitancy,  to  set  down  any  improve- 
ment of  commerce  as  likely  to  approve  itself  to  the  pro- 
tected mind.  The  view  naturally  to  be  expected  of  all 
Protectionists  is  that  expressed  by  a  veteran  of  their  per- 
suasion :  "  When  it  takes  the  wheat,  the  flesh,  the  corn, 
and  the  cotton  to  a  distant  manufacturing  centre,  a  loco- 
motive is  an  exhauster  ;  its  smoke  is  a  black  flag,  and  its 
whistle  is  the  scream  of  an  evil  genius  "  ;  or  by  another : 
"  The  interests  of  the  United  States — material  and  moral 
— would  be  greatly  benefited  if  the  Atlantic  could  be  con- 
verted into  an  impassable  ocean  of  fire."  Greeley  and 
Carey  are  now  dead,  however,  and  since  we  find  high 
Protectionist  authority  in  our  day  going  actually  so  far  as 
to  class  it  as  a  meritorious  act  to  "  open  the  market  for 
another  bushel  of  wheat  or  another  barrel  of  pork,"  we 
may  perhaps  be  justified  in  regarding  the  older  and  purer 
protectionism  as  by  this  time  repudiated,  and  some  mod- 
erate sale  of  our  products  in  foreign  lands  as  admitted  to 
be  no  bad  thing.  On  that  point  then  the  country  is 
generally  agreed.  The  difference  creeps  in  when  some  of 
us  affirm  that  the  greater  the  freedom  allowed  to  export 
enterprise  the  better ;  that  the  proper  extent  to  which  we 
shall  use  articles  produced  at  home,  and  articles  which  we 
are  to  procure  from  abroad  by  exchanging  articles  pro- 
duced at  home,  is  best  decided  by  leaving  producers  and 
exchangers  free  to  deal  as  pays  them  best ;  and  when  others 
strenuously  insist  that  the  matter  needs  regulation  ;  that 
exports  must  be  carefully  kept  down  to  the  measure  that 
can  be  paid  for  by  imports  adjudged  as  "  non-competing." 
The   question,  \\'hat  exports   are,  strictly  speaking,  non- 


FOREIGX  COUNTRIES  AS  COMMERCIAL  RIVALS.      I3I 

competing  ?  is  one  which  may  be  full  of  difficulties  to  the 
theorist,  but  it  presents  no  embarrassment  to  the  practical 
man.  Needless  to  puzzle  ourselves  why  coarse  wools  are 
to  be  set  down  as  competing  products,  when  a  century's 
experience  has  proved  that  we  can  get  them  to  best  ad- 
vantage by  international  exchange,  and  tropical  fruits  not 
so,  though  we  might  raise  them  in  great  quantities  under 
glass.  The  answer  that  the  one  can,  and  the  other  can 
not,  retain  a  lobby  to  advance  its  claims  is  fully  sufificing. 

COMMERCIAL    TREATIES. 

Aware  that  the  task  is  something  of  an  up-hill  one, 
to  convince  those  who  produce  more  than  can  be  con- 
sumed in  this  country  that  their  interest  lies  in  cutting 
down  their  production  for  a  while,  and  waiting  for  the  home 
demand  to  grow  up  to  them,  the  tariff  champions  occasion- 
ally take  a  grand  plunge,  as  we  have  seen,  and  come  up 
as  advocates  of  foreign  trade — in  fact,  as  the  original  and 
genuine  advocates  of  it,  beside  whom  we  who  seek  to 
relieve  it  of  taxation  are  mere  triflers.  Among  their 
devices  for  accomplishing  this,  concessions  to  freedom 
are  not  included.  Never — their  programme  offers  us  only 
more  governmental  meddling ;  by  commercial  treaties, 
namely,  and  subsidies  to  ships.  The  treaties  aim  to  do  in 
a  limited  way  what  general  free  trade  would  do  com- 
pletely, and  would  be  entitled,  doubtless,  to  the  praise  of 
being  good  as  far  as  they  go,  but  for  the  vexatious  official 
prescription  which  limits  them.  The  theory  underlying 
them,  that  when  a  country  permits  its  citizens  to  buy, 
unpunished  and  untrammelled,  such  of  the  produce  of 
another  country  as  they  can  buy  profitably,  it  is  doing  the 
second  country  a  favor  for  which  that  country  owes  it 
something  in  payment,  need  not  necessarily  annoy  us,  for 
it  is  not  by  theories  that  we  are  confronted.     The  reason 


132        ECO.VOAf/C  AND  INDUSTRfAL    DELUSfOMS. 

\\\\y  none  of  the  treaties  that  have  been  or  are  likely  to 
be  made  can  ever  do  us  any  considerable  j^ood,  is  that 
vested  interests  prevent  us  from  making  any  with  nations 
able  to  furnish  us  largely  with  raw  materials  for  manufac- 
ture, such  as  would  enable  us  to  make  goods  cheap  as 
they  must  be  for  foreign  trade. 

A  pleasant  little  party,  chiefly  of  Spanish-Americans, 
recently  made  a  junketing-tour  to  all  the  seven  wonders 
of  these  United  States,  ending  with  John  Wanamaker's 
store  as  a  grand  climax.  These  visitors  were  cordially 
received  everywhere,  and  had,  I  believe,  the  best  wishes 
of  all  our  citizens  for  a  perfectly  delightful  stay  among 
us.  From  a  better  acquaintance  with  other  countries,  it 
is  diflficult  to  see  how  harm  could  come  to  any  country. 
Only  when  it  was  claimed  that  the  presence  of  these 
agreeable  strangers,  through  the  treaties  and  commercial 
arrangements  that  they  were  to  be  convinced  or  cajoled 
into  recommending,  could  work  a  wondrous  change  in  our 
habits,  a  wide  extension  in  our  foreign  trade,  did  our 
natural  hospitality  give  place  to  sentiments  less  gracious 
■ — did  we  become  conscious  of  something  ridiculous  in  this 
theatrical  promenade.  The  stage-setting  for  it  was  suffi- 
ciently elaborate  ;  the  nations  of  Europe  were  ostenta- 
tiously advised  of  it,  and  we  bidden  to  stand  oiT  and 
watch  the  agonies  of  solicitude  and  trepidation  that  were 
about  to  seize  them  on  beholding  our  preparations  to 
wrest  from  them  their  commerce.  Of  course  we  were 
afterwards  advised  that  the  aforementioned  solicitude  and 
trepidation  had  duly  made  their  appearance  as  billed,  but 
the  evidences  thereof  were  for  several  weeks  vague,  im- 
personal, and  without  specification,  exactly  in  form  as 
though  prepared  beforehand  ;  no  man  was  exhibited  as 
entertaining  said  solicitude  and  trepidation,  nor  were 
we  treated   to  a  sio-ht   of  the  words  in  which  he  had  ex- 


FOREIGX  COUXTRIES  AS   COMMERCIAL   RIVALS.       1 33 

pressed  it.  When  at  last  we  were  permitted  to  behold 
the  proofs,  -AX  that  could  be  furnished  us  seemed  to  be  a 
few  paragraphs  from  one  or  two  newspapers  in  Paris,  and 
another  in  Belgium,  or  perhaps  Germany.  But  how  about 
the  great  commercial  nation,  which  we  were  most  con- 
cerned to  supplant,  the  one  whose  predominance,  if  left 
undisturbed,  must  defeat  all  our  efforts  at  controlling 
Spanish-American  trade  ?  Precisely  nothing.  On  the 
English  our  Pan-American  scheme  would  appear  to  have 
fallen  absolutely  flat.  Was  it  that  their  envy  and  vexa- 
tion were  too  deep  for  words?  Or  shall  we  believe  it  to 
be  because  they  knew  that  a  country  which  maintained 
high  prices  for  raw  material  was  handicapped  in  com- 
peting with  them,  too  heavily  to  be  helped  by  taking  off 
a  few  duties  on  unessential  articles  ?  I  had  no  other  view, 
after  seeing  how  this  Pan-American  junket  was  to  be 
managed,  than  that  its  main  object  was  to  keep  the  peo- 
ple amused,  and  to  draw  off  their  attention  from  topics 
that  might  prove  inconvenient.  The  confession  made  in 
the  Tribune,  for  instance,  that  "  it  is  not  to  be  expected 
that  this  Conference  will  have  the  power  to  give  us  a 
large  trade  with  Spanish  America  all  at  once,"  would  have 
settled  this,  if  there  had  been  a  doubt. 

RECIPROCITY. 

Few  words  have  been  oftencr  on  men's  lips,  in  discus- 
sing our  last-enacted  tariff,  than  the  word  "  reciprocity." 
Its  usual  meaning,  which  people  naturally  attached  to  it 
when  they  heard  that  the  Act  was  to  contain  a  reciprocity 
provision,  is  a  mutual  grant  of  favor  for  favor ;  as  when 
one  country  agrees  to  admit  free  or  under  special  condi- 
tions certain  products  of  another  in  return  for  like  conces- 
sions. As  now  interpreted,  it  means  a  grant  to  an  officer 
of  our  government,  of  power  to  impose  an  import  tax  of 


134        ECO  MO  MFC  AND  INDI'STRIAL   DELUSIONS. 

his  own  motion  or  to  obtain  concessions  by  threatening 
to  do  so.  The  President  is  empowered,  by  the  provision 
made  a  part  of  the  McKinley  law,  to  tell  the  foreign  coun- 
try that  sends  us  hides,  or  coffee,  or  sugar,  that  the  provi- 
sions of  our  tariff  admitting  those  free  were  enacted  with 
a  special  view  to  concessions  by  them,  although  he  and  all 
intelligent  foreign  observers  of  our  legislation  know  better 
— for  hides  remain  free  only  because  the  important  State  of 
Massachusetts  would  probably  vote  with  the  Democrats 
otherwise  ;  sugar  has  just  been  made  so  because  the  only 
State  that  grows  it  in  considerable  quantity  is  already 
unchangeably  Democratic,  and  coffee  was  freed  of  duty 
chiefly  to  prevent  reduction  on  the  things  whose  price 
our  capitalists  are  solicitous  to  keep  high  in  their  own 
interests.  By  means  of  that  statement  he  is  to  extort 
what  terms  he  can.  He  is  not  empowered  to  offer  any 
other  concessions  than  these — but  perhaps  even  less  than 
these,  if  backed  by  a  show  of  superior  force,  might  be 
enough  to  win  very  favorable  terms  indeed  from  weaker 
countries. 

A  leading  object  in  undertaking  the  negotiations  repre- 
sented as  "  reciprocity  "  was  to  divert  the  American 
farmer.  That  "  the  farmer  may  be  benefited — primarily, 
undeniably,  richly  benefited  " — was  the  avowed  motive 
of  the  Secretary  of  State  in  starting  the  discussion  ;  he 
was  to  be  blest,  it  was  explicitly  declared,  by  opening 
new  markets  for  his  wheat  and  pork.  So  much  for  the 
motive  as  avowed  ;  the  real  motive  we  must  judge  from 
observation  of  what  has  actually  been  done.  The  nego- 
tiations so  far,  in  the  first  place,  have  been  made  with 
countries  mainly  agricultural,  whose  demand  for  agricul- 
tural imports  is  naturally  small.  In  the  second  place,  the 
State  Department  has  been  very  careful  to  include  in  its 
stipulations  a  great  many  things  besides  wheat  and  pork. 


FOREIGN   COUNTRIES  AS   COMMERCIAL   RIVALS.       1 35 

the  most  prominent  of  them  being  manufactures  of  vari- 
ous kinds.  It  may  seem  ungrateful  in  the  manufacturer 
to  complain  of  what  is  done  in  the  interest  of  his  own 
calHng ;  but  really  I  cannot  consent  to  see  the  farmers  of 
this  country  beguiled  into  support  of  a  policy  of  which  we 
are  to  reap  the  only  considerable  benefits,  and  raise  no  word 
of  warning.  The  game  is  altogether  too  much  like  that  of 
persuading  our  farmer  fellow-citizens  to  tax  the  goods  of 
their  own  consumption  with  the  view  of  hiring  for  them- 
selves a  "home  market,"  to  be  quite  agreeable  to  watch. 

SUBSIDIES    TO    MERCHANT    VESSELS. 

I  cannot  consider  the  project  of  increasing  our  foreign 
commerce  by  subsidies  as  very  much  more  serious  than 
the  commercial-treaty  scheme  —  merely  another  device 
for  distracting  people's  attention  from  the  operations  of 
protection  on  them,  if  it  be  not  rather  to  send  them  off  on 
a  false  scent.  The  absurdity  of  laying  on  taxes  to  cut  off 
foreign  trade,  and  then  laying  on  more  taxes  to  counteract 
the  others  by  stimulating  foreign  trade,  has  been  pointed 
out  often  enough  to  be  familiar  to  every  one  ;  it  is  very 
thoroughly  exposed  in  the  admirable  essay  of  Mr.  Wells 
on  "  Our  Merchant  Marine."  But  there  is  a  point  of  view 
in  which  it  is  not  quite  so  absurd.  Any  new  expensive  enter- 
prises undertaken  by  government  contribute  to  strengthen 
the  demand  for  high  taxation  and  to  postpone  the  day  of 
relief.  And  it  will  be  very  serviceable  indeed  in  stifling 
those  clamors  that  are  so  fearfully  difficult  to  quiet  when 
once  raised,  from  the  victims  of  their  policy,  if  the  notion 
can  be  spread  that  this  additional  burden  is  the  very  thing 
to  which  the  oppressed  ought  to  look  for  deliverance. 
There  is  a  pleasant  appearance  of  compensation,  too, 
about  it ;  and  it  is  a  high  condescension  on  the  part  of  the 
"  beneficent  American  policy  of  protection  "  when  it  ap- 


13^        F.CONOMIC  AND   INDUSTRIAL    DELUSIONS. 

pears  to  embarrass  our  merchant  marine  in  one  way  to 
heap  prosperity  on  it  with  a  lavish  hand  in  another.  Tax 
farmer  and  merchant  to  benefit  the  manufacturer,  and 
then  tax  farmer  and  manufacturer  to  benefit  the  merchant 
— this  equahzes  matters  beautifully,  does  it  not  ? 

It  will  not  be  difificult  to  submit  the  question  of  subsi- 
dies to  the  test  of  figures.  Since  our  disadvantage  in 
foreign  markets  arises  essentially  from  our  inability  to 
furnish  our  consumers  with  goods  as  cheaply  as  can  our 
competitors,  let  us  suppose  our  annual  subsidy  entirely 
devoted  to  removing  this  inability ;  the  means  necessary 
for  starting  new  steamship  lines  being  furnished  from 
another  fund,  let  us  say.  The  proposition  of  the  subsidy- 
advocates,  I  believe,  is  to  begin  with  about  a  million  a 
year,  to  be  paid  for  carrying  the  mails.  Let  us  suppose,  for 
our  purpose,  that  over  and  above  the  expense  of  carrying 
the  mails  we  pay  four  millions  yearly,  this  being  a  little 
beyond  the  total  amount  given  for  mail  contracts  by  the 
nation  which  is  said  to  be  the  most  liberal,  because  it  has 
most  commerce  and  therefore  most  mail  to  carr)-.  Eng- 
land does  not  grant  subsidies,  properly  speaking;  it  is 
easy  to  call  her  payments  for  mail  carriage  by  the  nick- 
name of  subsidy,  but  in  fact  no  other  country  gets  so 
much  service  for  an  equal  outlay.  Now,  I  find  the  value 
of  British  exports  to  that  newest  addition  to  our  family  of 
republics,  Brazil,  set  down  at  not  far  from  $30,0CXD,000 
per  annum,  "chiefly  cotton,  iron,  woollen,  and  linen  goods." 
If  we  wish  to  displace  the  Briton  in  Brazilian  markets, 
what  we  need  to  do  is  to  supply  this  quantity  of  cotton, 
iron,  woollen,  and  linen  goods  more  cheaply  than  he. 
Well,  let  us  see.  We  can  compete  in  cotton  cloths,  un- 
bleached, because  we  get  the  raw  materials  for  them  on 
easier  terms  than  anybody  ;  but  when  we  come  to  prints, 
lawns,  ginghams,  and  the  like,  the  contest  is  harder  for  us, 


FORETG^r   COUNTRIES  AS   COMMERCIAL   RIVALS.       1 37 

because  the  machinery  for  making  them  and  the  dyes  and 
other  chemicals  are  "  protected."  The  retail  prices  of 
woollen  goods  in  our  stores  are  about  double  what  similar 
goods  cost  in  England,  though  probably  our  dealers  might 
find  themselves  able  to  furnish  them  in  quantities,  for 
export,  at  a  somewhat  less  disparaging  rate.  The  case  is 
similar  with  linen  goods,  and  for  manufactures  of  iron  the 
differences  run  from  nothing  (for  we  have  always  been 
able  to  compete  in  many  of  them,  by  skill  and  enterprise, 
notwithstanding  higher  cost  of  material)  up  to  double 
price.  On  the  whole,  it  is  within  bounds  to  say  that  we 
could  not  afford  to  send  the  Brazilians  such  goods  as  the 
British  send  them,  even  at  an  advance  of  15  per  cent.; 
20  per  cent.,  I  think,  would  be  a  fairer  estimate.  But 
15  per  cent,  on  $30,000,000  already  exceeds  $4,000,000, 
and  we  now  see  to  what  conclusion  our  calculation  leads 
us.  If  we  paid  a  subsidy  higher  than  the  highest  so-called 
subsidy  (in  the  form  of  mail  contracts)  paid  by  any  other 
country,  if  we  made  other  provision  for  starting  the  lines 
of  ships  and  for  carrying  mails,  spending  the  whole  of  this 
allow^ance  in  reducing  the  cost  of  our  goods  to  our  con- 
sumers— thus  not  only  carrying  them  for  nothing,  but 
paying  the  exporter  a  bounty — the  sum  would  not  yet  be 
sufficient  to  drive  our  British  rivals  out  of  the  single 
country  Brazil.  On  these  figures  I  may  rest.  They  may 
be  neither  "  so  deep  as  a  well  nor  so  wide  as  a  church- 
door,"  but  they  are  enough. 

SECRETARY    WINDOM's    REPORTS. 

The  first  report  of  Secretary  Windom  devoted  a  gener- 
ous deal  of  space  to  the  advocacy  of  subsidies  for  United 
States  steamship  lines,  which  advocacy  was  repeated  in 
his  second  report  and  in  his  last  speech.  More  ships 
might  be  owned  bv  our  own  citizens,  he  assured  us  :  which 


13^        P.COh'OMrr  AXn   rMDl'STRlAf.   dklusions. 

would  reduce  our  "  annual  tax  of  $I50,CXXD,(X)0  for  freights 
and  fares,"  and  also,  what  was  of  more  importance,  give  us 
direct  instead  of  roundabout  lines  to  our  foreign  custom- 
ers. As  it  is  perfectly  understood  on  all  sides  that  we 
could  go  into  the  ocean  transportation  business  any  day  if 
it  paid  us,  and  that  it  does  not  pay  us  because  other 
nations  do  it  cheaper  owing  to  our  restrictive  navigation 
laws,  and  other  business  therefore  pays  us  better,  there  is 
little  to  say  on  the  "  annual  tax  "  question  ;  and  in  his 
complaint  over  the  roundabout  steamship  lines,  the  Secre- 
tary put  cart  in  place  of  horse.  The  indirect  lines  of 
transportation  between  this  country  and  South  America 
are  a  result  of  our  disadvantage  in  those  markets,  not 
a  cause  as  he  represents  them.  Far  am  I  from  indifference 
as  to  whether  or  not  steamships  are  owned  in  this  country; 
but  since  we  can  own  as  many  of  them  as  we  care  to  own, 
as  soon  as  we  reform  the  mediaeval  navigation  laws  by 
which  we  are  hampered,  and  since  our  decline  in  number 
of  vessels  used  for  foreign  shipping  is  a  direct  consequence 
of  Protection's  work  in  preventing  our  use  of  necessary 
material  when  iron  began  to  be  substituted  for  wood  in 
construction,  and  in  depreciating  the  reward  of  the  Ameri- 
can navigator's  enterprise  by  taxation,  Avhile  Great  Britain 
enjoys  and  uses  every  advantage  of  free  trade,  we  need 
not  be  at  a  loss  how  to  bring  it  about. 

I  have  not  failed  to  notice  that  the  Secretary  follows 
other  pleaders  in  claiming  that  "  the  difficulty  is  not  so 
much  in  the  cost  of  building  ships  as  in  running  them  in 
competition  with  cheap  foreign  labor  supplemented  by 
immense  foreign  bounties,"  but  the  value  of  this  observa- 
tion is  fatally  impaired  by  his  neglect  to  explain  these 
four  facts  :  I,  that  he  himself,  in  accounting  for  the 
decline  in  our  foreign  shipping  (which,  as  his  tables  show, 
really  dates  from  1861,  the  first  year  of  high  tariffs^  lays 


FOREIGN  COUNTRIES  AS  COMMERCIAL   RIVALS.       1 39 

great  stress  on  the  introduction  of  iron  in  ship-building ; 
2,  that  the  difference  in  wages  of  labor  was  as  marked 
before  the  decline  as  after ;  3,  that  British  mail  allowances 
to  oceanic  lines  were  not  only  larger  than  ours  before  1861, 
but  were  actually  larger  then  than  they  now  are  ;  4,  that 
the  liberal  subsidies  paid  by  the  protected  nations  of 
Europe  (he  gives  the  amounts  paid  by  Spain,  France,  and 
Italy)  have  not  disturbed  the  supremacy  of  Britain  (which 
pays  no  subsidies  and  much  higher  wages  to  seamen)  a 
particle.  It  is  curious  to  see  him  ascribe  this  decline, 
which  dates  from  an  increase  in  our  protective  duties,  and 
has  been  accelerated  by  the  further  increases  made  since, 
"  to  the  system  of  Free  Trade,  which  has  wrought  such 
sweeping  destruction  in  our  foreign  shipping  interests." 
What  can  he  have  meant  ?  One  naturally  thinks  that  it 
might  have  been  the  free  trade  of  Great  Britain,  which 
has  undoubtedly  worked  in  that  direction,  until  he  reads, 
lower  down,  how,  "  listening  to  the  voice  of  free  trade, 
Congress  on  the  24th  of  May,  1828,  [save  the  mark  !  That 
was  the  very  Congress  that  gave  us  what  Rev.  Dr.  R.  E. 
Thompson  extols  as  '  the  highest  tariff  ever  enacted  in 
this  country ! ']  passed  an  act  withdrawing  all  protection 
from  our  shipping  interest,"  and  so  on.  Oh,  the  "sweep- 
ing destruction  "  of  free  trade,  as  enacted  by  a  fanatically 
protective  Congress  !  It  lies  in  a  dead  sleep,  or  (so  far  as 
it  works  at  all,  as  our  authority  himself  confesses)  works 
to  foster  and  not  destroy  for  33  years,  and  then  requires 
a  stringent  high  tariff  to  set  it  at  last  in  operation ! 

There  was,  as  a  matter  of  fact,  a  sharp  decrease  in  the 
tonnage  of  our  mercantile  marine  between  1828  and  1829, 
it  is  admitted.  The  records  of  the  Bureau  of  Navigation 
show  this ;  and  their  table  also  shows,  quite  as  plainly, 
two  or  three  other  facts  which  deprive  this  fact  of  any 
such  significance  as  Mr.  Windom  attached  to  it.     Since  it 


I40      F.co.yoMic  Axn  industrial  dkiu signs. 

is  about  "  our  foreign  shipping  interests"  that  \vc  have  to 
inquire,  we  will  consider  only  the  tonnage  occupied  in 
foreign  trade,  in  which  the  decline  from  1828  to  1829  was 
22  per  cent.  But  then  we  find,  in  going  farther  up  the 
column,  another  decline  of  22  per  cent,  between  18 10  and 
181 1,  and  one  of  nearly  27  per  cent,  from  1817  to  1818. 
Is  it  better  than  quibbling  to  lay  stress  on  the  repeal  of 
differential  tonnage  dues  in  1828,  and  call  the  ensuing  de- 
crease in  foreign-trade  tonnage  "  sweeping  destruction," 
while  no  attention  is  paid  to  the  greater  decrease  occur- 
ring in  the  absence  of  all  legislation  of  the  kind  ?  The 
table  shows  that  the  loss  following  1828  was  recovered  by 
1834,  while  the  tonnage  figure  of  1810  was  not  regained 
until  1847 — after  the  adoption  of  the  Walker  tariff.  An- 
other point:  the  number  of  vessels  built  in  this  country, 
which  had  been  increasing  for  several  years,  began  to  fall 
off  in  1827.  Yet  another:  the  exceptional  decrease  in 
total  tonnage,  during  the  year  mentioned,  is  due  to  the 
fact  that  the  tonnage  in  coastwise-trade  then  declined, 
even  more  than  that  in  foreign  trade — by  almost  40  per 
cent,  indeed, — while  no  decline  in  this  item  occurred 
in  181 1  or  1818.  Is  it  pretended  that  the  Act  of  May  24, 
1828,  was  more  injurious  to  the  trade  which  it  left  wholly 
in  American  hands  than  to  that  whose  opportunities 
it  divided  with  others  ?  Or  that,  if  the  coastwise-shipping 
decline  was  due  to  some  other  cause,  that  cause  had  no 
influence  whatever  on  the  rest  of  our  shipping.? 

It  is  delightfully  easy  work,  tearing  to  shreds  an  argu- 
ment for  subsidies  as  means  of  putting  our  foreign  com- 
merce on  its  feet ;  but  I  must  not  linger  too  long  at  it.  I 
wished  to  show,  and  have  shown,  that  such  subsidies,  on 
a  far  more  liberal  scale  than  any  one  has  yet  dared  to 
propose,  are  wretchedly  insufificient  for  their  avowed  pur- 
pose— sufficient  thouijh  they  confessedly  are   for  certain 


FOREIGN   COUNTRIES  AS   COMMERCIAL   RIVALS.       I4I 

purposes  not  avowed.  The  expedient  is  that  of  bailing 
out  our  ship  with  a  pint-cup,  instead  of  stopping  the 
leak. 

AMERICAN    EXPERIENCE    WITH    SUBSIDIES. 

It  would  readily  be  believed,  from  the  form  in  which 
the  appeal  for  subsidies  to  United  States  shipping  is  put, 
not  only  that  the  plan  had  done  the  mighty  works  which 
it  is  well  known  not  to  have  done  for  English  shipping, 
but  that  it  had  never  once  occurred  to  the  other  European 
countries,  whose  inferiority  to  England  in  this  respect  is 
so  glaring  and  so  hopeless,  and  that,  moreover,  it  was 
something  quite  novel  and  unheard-of  in  our  own  coun- 
txy.  This  last  impression  is  as  unfounded  as  the  other 
two.  Subsidy  schemes  have  been  more  than  once  before 
our  Congress  ;  and,  in  point  of  fact,  we  have  actually  tried 
them  in  several  instances.  Two  or  three  subsidized  steam- 
ship lines,  of  which  the  Collins  line  to  Liverpool  was  the 
most  famous  and  most  liberally  endowed,  tried  and  failed 
before  the  war.  The  favorite  reason  for  their  failure  has 
always  been  that  they  were  helpless  Avithout  governmen- 
tal assistance,  in  competition  Avith  English  lines  that 
received  it.  Those  who  are  satisfied  with  this  explana- 
tion find  it  very  easy  to  forget  that,  at  the  very  time 
when  the  Collins  line  gav^e  up  the  contest,  Mr.  Inman  was 
running  steamers  regularly  over  the  same  course  without 
help  from  any  source  ;  and  that  within  a  few  years  of  its 
demise,  other  lines  were  pressing  forward  in  the  same 
competition,  Avithout  artificial  advantages.  It  was  British 
unsubsidized  lines,  not  British  subsidized  lines,  whose 
rivalry  was  finally  fatal  to  Collins.  A  Brazilian  line  and 
a  Pacific  Mail  line  received  legislative  largesses  after  the 
war,  and  their  failure  to  receive  more  of  them  was  not 
owing  to  a  lack  of  gratitude  on  their  part  ;  for  a  legislative 


142         ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

investigation  developed  the  fact  that  steamship  lines  had 
been  quite  as  active  in  subsidizing  congressional  lobbies  as 
Congress  in  subsidizing  them.  These  subsidy-jobs  died 
and  even  putrefied  while  Grant  was  at  the  helm,  and  they 
left  behind  them  a  fragrance  that  was  for  years  effective 
in  warning  off  the  wary  statesman. 

Our  Pacific  and  Brazil  subsidies  failed  to  turn  the 
course  of  international  commerce,  as  would  any  possible 
future  subsidy.  They  failed  to  arrest  the  decline  of  our 
merchant  marine,  as  would  any  future  subsidy.  They 
succeeded  only  in  enriching  a  few  schemers,  as  would  any 
future  experiment  in  the  same  line.  In  the  cry  for  sub- 
sidies, no  note  of  recognition  for  these  illustrations  of 
their  practical  working  is  ever  heard.  Is  it  unjust  to 
ascribe  this  silence  to  an  ardent  desire  on  the  part  of 
those  who  crave  them,  that  our  experience  of  them  should 
be  forgotten?  Surely,  if  the  effect  of  this  policy  had 
been  as  salutary  in  the  past  as  we  are  taught  to  see  it  in 
the  future,  it  would  be  commended  by  more  testimony 
from  history  and  less  from  conjecture. 

HISTORY    OF    OUR    MERCANTILE     MARINE    FOR    SEVENTY    YEARS. 

It  is  the  fashion  of  the  tariff-men,  since  they  forsook 
the  teachings  of  Greeley  and  Carey,  as  we  have  seen,  to 
advertise  the  welfare  of  our  merchant  marine  as  in  their 
own  peculiar  keeping,  and  to  set  down  those  of  us  who  do 
not  regard  as  the  best  and  most  fitting  cure  for  the  ills  that 
they  themselves  have  induced  upon  it,  the  nostrum  of 
their  prescribing,  as  its  assailants.  The  wolf  has  turned 
shepherd,  and  those  who  mistrust  him  are  foes  of  the 
flock.  We  are  to  insure  the  safety  of  our  city  by  admit- 
ting the  Wooden  Horse  its  besiegers  have  prepared,  and 
the  serpents  they  have  called  up  to  crush  out  the  life  of 
him  who  would  close  our  gates  against  it  are  already  hiss- 


FOREIGX   COUNTRIES  AS   COMMERCIAL    RIVALS.       1 43 

ing.  But  before  we  rush  headlong  to  carry  out  the  coun- 
sels of  those  under  whose  management  our  merchant 
marine  has  been  sacrificed,  as  to  the  best  means  of  undo- 
ing their  deliberate  work,  might  we  not  just  as  well  make 
an  examination  of  its  rise  and  fall,  as  shown  in  the 
Treasury  tables  of  vessels  "  registered  "  and  vessels 
"  enrolled,"  so  that  we  may  see  by  the  evidence  of  actual 
trial  what  has  helped  and  what  has  hindered  it  in  the 
past  ? 

Three  curves,  illustrating  these  points,  appear  in  the 
Chart  showing  our  Commercial  Development.  The  upper- 
most of  these  indicates  the  total  tonnage  per  inhabitant  ; 
the  lighter  curve  below  it,  that  belonging  to  the  "  enrolled  " 
class,  employed  in  the  coastwise  trade,  while  the  "  regis- 
tered "  or  foreign-trade  tonnage  per  inhabitant  is  indicated 
by  the  heavier  curve.  The  figures  from  which  the  upper 
curve  is  drawn  are  a  little  in  excess  of  the  sum  of  the 
other  two  sets ;  for  they  include  a  class  of  "  licensed  " 
vessels,  of  which  no  separate  account  is  taken.  Those 
vessels,  employed  in  the  fisheries,  made  up,  for  a  few  years 
about  1830,  more  than  an  eighth  part  of  our  whole  ton- 
nage ;  but  their  proportion  has  not  for  some  years  past 
exceeded  one  fortieth.  The  three  curves  agree  in  the 
abrupt  decline  for  the  year  1829,  already  discussed  ;  after 
that,  their  general  direction  is  upward  until  near  the  time 
of  the  civil  war,  after  which  they  all  turn  downward,  and 
are  still  declining.  The  decline  is  far  more  conspicuous 
for  vessels  in  the  foreign  trade,  being  nearly  steady  with 
them,  from  1856  on  ;  for  the"  coastwise  "  vessels  the  1856 
decline  was  afterward  temporarily  recovered,  owing  to 
the  peculiar  exigencies  of  the  war.  Possibly  some  of 
those  withdrawn  from  the  foreign  trade  while  the  Ala- 
bavia  was  afloat  were  added  to  their  number.  The 
years  when  the  coastwise  marine  fell  off  most  were  1866 


144  ''.CONOMIC  AND   INDUSTRIAL    DELUSIONS. 

and  1876,  and  these  reverses  differed  from  those  that  had 
preceded  the  war  by  remaining  without  recovery. 

What  caused  the  transition,  beginning  in  1856,  from 
the  full  tide  of  prosperity  to  disaster  and  decadence?  In 
the  first  place,  the  year  1856  marked  the  close  of  the 
Crimean  War,  Avhen  the  energies  of  the  English — our 
chief  rivals  in  the  shipping  industry,  until  we  concluded 
to  resign  the  field  to  them  altogether — were  recalled 
from  Destruction  to  Commerce.  Our  gain  during 
the  years  1854  and  1855,  like  that  of  the  English 
during  our  war  (see  the  dotted  curve),  was  made"  at 
our  rival's  expense ;  nor  would  a  loss  have  followed 
it,  but  for  a  second  and  more  important  factor.  Iron 
had  been  tried,  and  proved  successful  in  construction  of 
ocean  vessels ;  so  that  by  1855  the  reign  of  the  wooden 
ship  was  over.  Protectionist  orators  and  philosophers 
have  not  neglected  to  notice  the  coincidence,  and  their 
inveterate  predilection  for  mares'  nests  has  given  them 
much  to  say  about  the  "high  cost  of  labor"  in  building 
iron  vessels — which  confessedly  exists.  What  they  do 
not  explain,  are  a  few  points  equally  obvious,  and  of 
closer  relevancy :  first,  why,  if  the  greater  cost  of  produc- 
tion is  not  fully  compensated  by  the  greater  value  of  the 
product,  iron  ships  are  ever  built  by  anybody ;  second, 
the  fact  that  the  wages  of  the  laborer — for  that  is  what 
they  seem  to  mean  by  their  "cost  of  labor" — have  always 
been  higher  on  this  side  the  Atlantic,  even  while  he  was 
employed  on  wooden  ships ;  tJiird,  whether  or  not  we  are 
handicapped  by  the  higher  price  at  which  we  insist  on 
keeping  iron  in  this  country.  The  third  question,  proba- 
bly the  most  embarrassing,  is  certainly  the  most  import- 
ant. We  cannot  say  that  the  change  from  wood  to  iron 
was  attended  by  any  appreciable  change  in  the  relative 
wages  of  labor  here  and  in  Europe  ;  and  we  can  certainly 


FOREIGN   COUNTRIES  AS   COMMERCIAL   RIVALS.       I45 

say  that  that  change  was  one  from  raw  material  which  wc 
could  procure  as  cheaply  as  anybody,  to  material  which  it 
has  always  been  our  commercial  policy  to  prevent  our 
citizens  from  obtaining  on  the  same  easy  terms  that  are 
permitted  most  European  nations.  Even  under  the 
low  tariffs  from  1857  to  1861,  crude  iron  was  taxed  24 
per  cent. ;  the  effect  of  which  was  to  throw  gratuitously 
into  the  hands  of  our  British  rivals  a  great  advantage 
in  ship  construction.  How  effectively  they  have  used 
that  advantage,  the  course  of  the  two  curves  of  merchant- 
marine  tonnage  plainly  shows. 

DEVELOPMENT  OF  THE  BRITISH  MERCANTILE  MARINE. 

The  tonnage  curve  for  Great  Britain  presents  several 
points  of  interest.  It  has  three  directions :  one  of  rapid 
increase,  i856-'65 — most  rapid,  it  must  be  noted,  during 
the  years  of  the  war,  while  our  registered  tonnage  was 
suffering  its  severest  losses ;  another  of  slow  decrease, 
i865-'72  ;  followed  by  a  third,  of  slow  increase,  since  1872. 
The  change  in  1872  corresponds  curiously  with  that  shown 
by  British  exported  merchandise  at  the  same  time  ;  and  it 
indicates  a  change  in  the  direction,  rather  than  in  the 
amount,  of  their  commercial  energy.  Their  balance-of- 
trade  curve  also  took  a  turn  in  1872;  and  the  natural 
inference  is  that  the  English  began  after  that  year  to  pay 
for  their  imported  goods  by  less  production  for  export, 
and  more  ocean  carriage — the  total  volume  of  importa- 
tions being  very  little  altered,  and  the  movement  of  specie 
substantially  unaffected  by  the  changing  merchandise 
balance. 

When  one  remembers  that  of  ten  steamship  lines  flying 
the  British  flag,  and  regularly  plying  between  this  country 
and  Europe,  only  three  receive  allowances  of  any  kind 
from  the  national  treasurv,  the  remainder  of  them,  with 


146         ECO.YOM/C  AND   INDUSTRIAL    DELUSIONS. 

64  per  cent,  of  the  tonnage,  being  passed  completely 
over  in  the  distribution  ;  that  of  these  three  the  Cunard 
line  alone,  with  barely  one  twelfth  of  the  total  tonnage, 
ever  received  one  penny  before  its  complete  success  with- 
out such  allowance  had  been  unimpeachably  established  ; 
that  the  British  payments  called  "  subsidies "  go  in  all 
cases  to  the  very  lines  that  have  most  satisfactorily 
proved  their  ability  to  succeed  without  any  ;  and  that 
these  allowances,  being  extended  under  open  competi- 
tion, have  again  and  again  been  accorded  to  German 
lines ;  with  these  facts  in  mind,  little  argument  is 
needed  to  dispose  of  the  subsidy  question  in  this  con- 
nection. I  have  but  a  single  fact  to  add,  and  one  is 
enough  effectually  to  annihilate  the  pretence  that  Great 
Britain  owes  her  commercial  dominance  to  any  such 
device.  Absurd  though  it  is  to  class  as  "  subsidies  "  the 
payments  for  mail  transportation  by  the  British  govern- 
ment, I  shall  do  so  for  the  instant,  and  ruthlessly  exclude 
from  the  reckoning  all  vessels  that  receive  any  govern- 
ment money  for  any  purpose.  The  proportion  of  the 
total  British  tonnage  in  such  receipt  is  about  13  per  cent. 
A  recent  writer  in  the  Neiv  York  Tribituc  "pnis  it  at  16  per 
cent.,  and  that  higher  figure  I  am  ready  to  accept.  Re- 
garding, then,  only  the  remaining  84  per  cent,  of  the 
British  mercantile  fleet,  vessels  which  receive  no  govern- 
ment aid  in  any  form,  which  have  to  meet  the  competition 
of  the  others  without  more  favor  than  is  shown  to  foreign 
ships, — how  has  it  fared  with  them  ?  That  can  easily  be 
seen.  Great  Britain's  mercantile  tonnage  in  1889  was 
0.205  per  inhabitant,  and  84  per  cent,  of  that  is  O.172,  the 
value  indicated  by  a  star  on  the  chart.  We  thus  see  how 
the  totally  unsubsidized  portion  of  the  British  merchant 
marine  has  been  growing.  It  is  now  not  only  greater,  but 
greater  per  inhabitant  than  the  entire  marine  was  until 


FOREIGN   COUNTRIES  AS   COMMERCIAL   RIVALS.       1 47 

1863.  We  constantly  hear  that  it  is  useless  to  compete 
with  British  subsidized  ships  unless  we  pay  subsidies. 
Here  we  see  the  mighty  growth  of  a  fleet  in  constant 
competition  with  those  ships — of  the  British  unsubsidized 
ships.  In  sober  candor,  is  that  pretence  worthy  of  a 
further  word  ? 

INFLUENCE    OF    TARIFF    RATES    TESTED. 

It  has  been  well  said  that  the  counterfeit  proves  the 
genuine.  With  such  zealous  persistence  have  quack 
remedies — "reciprocity  treaties"  with  a  few  poor  and 
backward  countries  to  enrich  our  export  trade,  with  a  few 
exclusively  agricultural  countries  to  provide  for  our  agri- 
cultural products  a  better  market,  and  subsidies  to  do 
something  that  subsidies  are  practically  incapable  of 
doing,  to  rescue  and  build  up  our  shipping — been  adver- 
tised and  prescribed,  that  we  may  be  at  a  loss  to  recognize 
the  real  character  of  our  ailment.  When  recognition 
comes,  the  proposed  remedies  will  be  seen  to  be  but 
aggravations  of  the  disorder.  To  sufferers  from  the 
undue  complexity  and  intricacy  of  our  financial  system 
they  only  bring  further  complexity  and  intricacy,  and  on 
sufferers  from  high  taxation  they  only  pile  taxation 
higher.  For  light  to  devise  a  measure  that  can  bring 
real  relief,  we  must  undertake  a  further  study  of  the  facts 
of  our  commercial  history.  I  have  now  to  present  some 
evidence  as  to  the  effect  of  our  scale  of  import  duties  upon 
our  mercantile  marine. 

The  results  of  the  test  by  changes  during  two-year 
intervals  need  be  given  in  no  such  detail  as  was  found 
advisable  in  considering  effects  on  our  export  business, 
the  interval  being  obviously  too  short  for  this  purpose, 
Ownership  of  vessels  cannot  be  adjusted  to  accommodate 
changes    in   tariff   rates   so   readily  as  exportations  and 


148         ECONOMIC  A  AW  INDUSTRIAL    DELdSIONS. 

importations  of  goods  ;  and  thus  the  continued  growth  of 
both  classes  of  our  merchant  vessels,  between  1849  '"^^^ 
1855,  of  which  one  of  the  causes  was  very  probably  the 
reduction  of  duties  by  the  Walker  tariff,  has  here  to  be 
credited  to  higher  duties,  becausetherates  were  increasing 
about  this  time  at  the  rate  of  one  per  cent.,  or  a  fraction 
of  one,  during  each  two-year  interval.  Similarly  the  con- 
tinued decline  in  our  tonnage  through  the  years  1869  to 
1873,  which  I  have  little  hesitation  in  ascribing  in  great 
part  to  the  war  duties,  has  to  be  laid  to  the  charge  of  a 
diminution  which  then  occurred  in  those  duties.  By  this 
test  the  tariff-effect  on  the  total  tonnage  of  vessels  em- 
ployed in  foreign  trade  becomes  completely  imperceptible. 
In  its  changes  of  sign,  the  number  of  agreements  and  of 
disagreements  with  the  change  in  the  duty  are  substantially 
equal,  being  28  and  26 ;  and  though  the  net  amount  of 
those  changes  is  in  disagreement — shows,  that  is  to  say, 
that  the  amount  of  increase  for  decreasing  duties,  plus 
decrease  for  increasing  duties,  exceeds  that  of  simul- 
taneous increase  or  decrease — by  0.069  in  all,  this  amount 
altogether  disappears  when  I  exclude  the  years  1861  to 
1865.  While  the  Alabama  and  other  enemies  of  our 
foreign  commerce  were  afloat,  our  losses  in  this  part  of 
our  merchant  marine  were  not  all  to  be  ascribed  to  the 
tariff. 

The  changes  in  the  volume  of  our  marine  in  the  coast- 
wise trade,  strangely  enough,  meet  this  two-year-interval 
test  very  differently.  Here  we  find  the  agreements  of 
sign,  with  changes  in  the  duties,  to  be  17  and  the  dis- 
agreements 36;  and.  the  net  amount  of  disagreement  is 
0.12 1.  As  the  sum  of  the  duty-changes,  added  without 
distinction  of  increases  and  decreases  (see  discussion  in 
Chapter  III.)  was  249  per  cent,  on  dutiable  imports,  and 
257  per  cent,  on  total  imports,  we  have  to  infer  from  this 


FOREIGN^  COUMTRIES  AS   COMMERCIAL  RIVALS.       149 

test  that  the  effect  of  a  change  In  the  duty  is,  as  a  rule,  to 
leave  the  foreign-trade  tonnage  unchanged,  and  to  reduce 
the  coastwise-trade  tonnage  by  about  one  two-thousandth 
of  a  ton  per  capita  for  every  one  per  cent,  by  which  the 
duty  is  raised. 

For  the  reasons  given,  this  test  is  not  depended  on 
except  as  furnishing  some  sort  of  corroboration  for  the 
results  furnished  by  the  better  test,  in  which  the  changes 
are  observed  between  one  and  another  longer  or  shorter 
interval  of  time,  distinguished  by  general  uniformity  of 
duties.  The  accompanying  illustration  shows  on  the  left 
of  the  zero  line  our  import  duty  by  the  two  reckonings, 
just  as  in  the  illustration  to  the  third  chapter  ;  and  on  the 
right  the  amount  of  our  merchant  marine  in  foreign  and 
in  domestic  trade.  The  distance  of  each  tonnage  line 
from  the  zero  shows,  of  course,  the  average  value  for  the 
period,  as  deduced  from  the  table  used  in  constructing 
the  chart  ;  and  its  increases  and  diminutions  will  be  seen 
to  correspond  sufificiently  well  with  those  of  the  duty 
lines,  to  afford  to  the  eye  a  very  clear  indication  whether 
or  not  the  tariff  influences  our  shipping.  Coming  now 
to  the  figures,  the  foreign-trade  tonnage  shows  quite  dis- 
tinct evidence  of  the  unfavorable  influence  of  high 
tariffs,  for  its  net  total  of  change  is  in  "  disagreement  " 
by  0.096,  or  about  a  thousandth  of  a  ton  per  inhabitant 
for  every  one  per  cent,  change  in  the  duty  ;  and  this  net 
total  is  reduced  no  lower  than  0.059  (which,  as  the  divisor 
is  also  greatly  reduced,  results  in  very  nearly  the  same 
proportion  as  before)  when  we  exclude  the  two  heavy 
"  disagreeing  "  changes  in  1861  and  1865.  The  net  dis- 
agreement would  still  be  as  great  as  0.041,  giving  about 
0.0007  ^or  every  one  per  cent,  of  change  in  the  duty,  if 
the  reduction  of  1828  were  also  excluded — as  Secretary' 
Windom  would   doubtless  have  advised,  having  in  view 


I50         ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

only  the  repeal  of  differential  tonnage  dues  (which  might 
conceivably  have  affected  our  foreign-trade  tonnage),  and 
not  the  other  circumstances  I  have  adduced. 

THE    TARIFF    UNFAVORABI.E    TO     OUR    COASTWISE    TRADE. 

Alike  in  both  tests,  the  tariff  effect  comes  out  more  dis- 
tinctly and  strongly  for  coastwise  than  for  foreign  tonnage. 
Out  of  fourteen  changes  in  the  tariff,  only  three  were 
accompanied  by  "  agreeing "  changes  in  this  quantity, 
with  ten  "  disagreeing,"  and  one  zero.  The  net  total 
disagreement,  0.097,  fully  one  thousandth  of  a  ton  for 
every  one  per  cent,  duty-change,  is  subject  to  no  deductions 
for  "  Confederate  pirates,"  or  "  Act  of  24th  May,  1828," 
which  could  have  troubled  the  foreign  trade  alone.  There 
appears,  therefore,  to  be  no  reasonable  doubt  that  increased 
duties  are  unfavorable  and  reduced  duties  favorable  to  the 
grotvtli  of  our  merchant  Diarine,  as  estimated  by  number 
of  vessels  registered  and  enrolled,  per  unit  of  population; 
that  the  tariff  is  especially  discouraging  in  the  coastwise 
trade ;  that  the  effect  of  a  change  in  it,  other  circum- 
stances remaining  unchanged,  is  on  an  average  to  reduce 
or  increase  the  per-capita  tonnage  by  about  a  thousandth  of 
a  ton  for  every  one  per  cent,  by  wliich  the  duties  are  raised 
or  lowered ;  and  that  the  change  may  be  expected  to  take 
this  direction  about  ten  times  in  thirteen. 

The  revelation  from  this  inquiry,  that  our  merchant 
marine  in  domestic  trade  is  as  unfavorably  influenced  by 
the  tariff  and  is  decidedly  more  sensitive  to  its  changes 
than  that  in  foreign  trade,  is  one  which  I  was  quite 
unprepared  to  expect ;  for  I  had  believed,  until  I  found 
the  facts  otherwise,  that  its  discouraging  effects  would  be 
far  more  pronounced  in  the  foreign  trade,  whose  repres- 
sion is  the  guiding  motive  of  protection.  That  some 
discouragement  of  the  domestic  shipping  business  should 


-i 

A 


N. 
Tl 


KATES   OF    IMPORl     LlU 


(Excl.  those  ill  lS( 

Changes  in  Foreign  Trade  Tannage  ]icr  cai). 
(Excl.  those  ia  1861  and  1865.) 
Changes  in  Coastwise  Trade  Tonn^e  per  cap. 
N.B.     Changes  "'agree"  when  they  sho' 

Ihcy  "ilisagree." 
The  full   liltttlt  line  on  the  right  side  of   the   Zero  <U 
Trade  Tonnage  ;    bolli  per  head  uf  pupulali 


FOREIGN  COUNTRIES  A  Si   COMMERCIAL  RIVALS.      151 

result  from  a  policy  which  increases  the  cost  of  building 
and  rigging  the  ships,  and  along  with  these  the  prices  of 
the  goods  to  be  interchanged,  is  natural  enough  ;  and  this 
branch  is  more  sensitive,  doubtless,  because  the  same 
effect  becomes  more  speedily  manifest  on  smaller  vessels 
and  shorter  voyages.  But  the  fact,  however  it  be  ex- 
plained, is  assuredly  of  high  importance.  There  is  no 
room  for  the  pretence  that  cutting  off  our  foreign  market 
"  builds  up  the  home  market,"  when  we  see  that  under 
the  same  influences  both  increase  or  decrease  together. 
There  is  no  room  for  the  pretence  that  the  reason  we 
cannot  succeed  in  getting  any  business  for  our  vessels  in 
foreign  trade  is  because  of  some  supposed  encouragement 
bestowed  upon  our  competitors — or  because  of  anything 
else  whatever  but  our  own  protective  folly — when  we 
have  here  the  proof  of  what  protection  does  for  a  business 
from  which  every  competitor  is  rigorously  excluded  by 
law.  The  wealth  of  the  nation  per  capita  has  been 
greatly  increasing  ;  shipbuilding  and  navigation  have  im- 
proved, along  with  other  arts  ;  and  yet  our  part  in  these 
enterprises,  even  where  we  insist  on  keeping  the  whole 
business  in  our  own  hands,  has  been  retrograding.  Is  it 
not  time  to  "  face  the  other  way,"  and  try  to  win  back 
what  we  have  lost  ? 

DIFFERENCE  FROM  GREAT    BRITAIN  IN  ECONOMIC    CONDITIONS. 

We  have  remaining  for  consideration,  as  a  condition  of 
success  in  this  international  rivalry,  greater  freedom  of 
trade.  The  fact  that  the  very  idea  of  a  commercial  rival 
at  once  suggests  Great  Britain  as  the  one  most  redoubta- 
ble, has  its  significance.  If  any  nation  is  going  to  come 
in  ahead  of  us,  in  the  competition  of  industrial  and  com- 
mercial enterprise, — if  any  one  must  be  guarded  against, 
and  withstood  at  every  point,  it  is  always  the  great  free- 


152         F.rOh'OMrC  AND   INDUSTRIAL   DELUSIONS. 

Ir.idc  nation.  In  face  of  the  copious  resources,  the  un- 
consumcd  enterprise,  the  splendid  prosperity  of  the 
British,  the  IVotectionist  is  perpetually  brought  as  in 
face  of  a  granite  wall.  Is  it  surprising,  the  eagerness  with 
which  he  seeks  to  dodge  the  encounter — darts  and  plunges 
anywhere,  everywhere,  so  it  be  out  of  the  way  ?  Since 
these  efforts  are  less  systematic  than  spasmodic,  they 
would  call  for  little  notice,  perhaps,  but  that  we  cannot 
afford  to  overlook  any  obstacle  in  existence,  petty  and 
even  despicable  though  it  may  at  first  sight  appear,  in  the 
way  of  our  country's  highest  industrial  progress.  Drop- 
ping figures  of  speech,  I  propose  now  to  consider  a  few  of 
the  differences  found  between  Great  Britain  and  our  own 
country,  which  are  presented  as  reasons  why  the  one 
would  miserably  fail  with  the  economic  policy  by  which 
the  other  is  so  brilliantly  successful. 

A  plea  that  used  to  be  very  common  is  that  England 
kept  on  with  protection  until  she  got  her  industries 
established,  and  that  we  cannot  afford  to  give  it  up  until 
we  have  brought  ours  to  the  same  stage.  Of  the  "  estab- 
lishing "  power  of  protection  I  have  already  said  sufificient. 
It  is  certain  that  if  the  English  themselves  believed  in  it 
— and  also  believed  that  industries  so  established  were 
worth  having — they  would  never  have  been  persuaded  to 
relinquish  it.  But  more  than  that  :  if  protection  could  be 
limited  in  this  country  to  such  lines  as  in  England  were 
"established"  in  before  1846,  to  which  alone  the  argu- 
ment applies,  then  would  we  have  a  protection  which  few 
beneficiaries  would  care  to  advocate,  and  few  free-traders 
would  contest.  Think  of  a  protective  system  which  did 
nothing  for  steel  rails,  or  any  steel  made  by  the  Bessemer 
or  Siemens-Martin  process,  or  any  apparatus  employed  in 
telegraphing,  or  anything  belonging  to  a  steamship  or 
a  railway  train  of  the  present  construction  !     It  is  in  those 


FOREIGX  COUNTRIES  AS   COMMERCIAL   RIVALS.       I  53 

things  precisely  that  British  rivalry  is  most  redoubtable. 
As  a  matter  of  plain  fact,  England  has  done  more  at 
establishing  such  industries  as  we  would  wish  to  have, 
under  free  trade  than  ever  before. 

It  is  sometimes  urged  that  in  consequence  of  the  den- 
sity of  her  population  Great  Britain  is  unable  to  provide 
sufficient  food  for  all,  and  is  therefore  under  the  necessity 
of  doing  more  or  less  trading  abroad  to  secure  a  supply ; 
that  her  national  policy  is  decided  by  her  necessity ; 
hence  the  inference  is  drawn  that  for  us,  not  under  simi- 
lar necessity,  national  policy  must  be  different.  But 
why?  That  is  never  explained.  If  there  is  any  principle 
of  sound  policy  more  certain  than  another,  it  is  that  those 
to  whom  an  exchange  is  necessary  are  the  very  best  ones 
to  deal  with  ;  their  demand  is  surest  and  most  constant, 
and  they  are  readiest  to  give  us  favorable  terms. 

The  difference  so  often  insisted  on,  in  wages  of  labor,  is 
of  course  a  direct  consequence  of  the  one  just  treated. 
It  is  assumed,  in  defiance  of  all  observation  and  expe- 
rience, that  hampering  international  trade  gives  us  some 
occult  mysterious  power  to  prevent  wages  from  equalizing 
themselves,  that  we  could  not  exert  if  trade  were  free. 
That  assumption  will  be  examined  at  length  in  the  next 
chapter  ;  the  labor  question  is  too  important  to  be  com- 
prehended in  a  paragraph. 

A  kindred  objection  to  our  adoption  of  free  trade  is 
based  on  the  fact  that  the  rate  of  interest  on  loans  is 
higher  in  this  country  than  in  the  Old  World.  Our  manu- 
facturers must  pay  more  for  capital,  it  is  urged,  and 
therefore  "  cannot  compete."  This  is  another  objection 
that  is  based  less  on  reason  than  on  desperation.  Rate 
of  interest  may  be  high  from  either  of  two  causes :  uncer- 
tainty about  repayment,  or  abundance  of  good  paying 
investments.     I  shall  decline  to  consider  the  former  cause. 


154      ECONo.\rir  and  indi'striai.  dklusioxs. 

as  tlic  view  that  wc  arc  nationally  dishonest,  or  lacking  in 
business  juds^mcnt,  needs  not  to  be  controverted  ;  while 
the  fact  that  some  kinds  of  investment  bring  a  large 
return  in  this  country,  is  not  in  itself  a  good  reason 
why  taxation  should  be  levied  to  increase  the  return  from 
other  kinds  of  investment — for  this  is  exactly  what  pro- 
tection on  account  of  high  interest  amounts  to,  unless  we 
take  the  other  tack,  and  suppose  ourselves  a  fraudulent 
or  unbusiness-like  nation.  No  one  who  has  propounded 
this  objection  has  ever  deigned  to  explain  why  protection 
is  not  necessary  between  the  Atlantic  slope  and  the  Rocky 
Mountain  region,  which  differs  more  from  it  in  rate  of 
interest  than  does  England.  When  that  point  is  satisfac- 
torily cleared  up,  we  may  perhaps  treat  the  matter  more 
solemnly. 

A  higher  rate  of  interest,  being  a  sign  that  investments 
pay  better,  is  to  be  taken  as  a  favor  of  fortune  ;  so  is  our 
ability  to  pay  higher  w-ages,  and  to  provide  more  food 
for  our  population.  It  is  very  interesting  to  observe  this 
trait  in  common  about  the  conditions  so  eagerly  seized 
upon  as  justification  for  a  protective  policy :  that,  when 
examined,  they  turn  out  to  be  points  of  strength  in  our 
own  country,  and  corresponding  weakness  in  our  competi- 
tor. Does  it  appear  strange  to  find  strength  assumed  as 
needing  protection,  w^hile  weakness  is  denied  such  need  ? 
Strange  it  would  assuredly  be,  if  protection  were  some- 
thing that  gave  strength  instead  of  exhausting  it.  What 
our  protective  system  gives  us,  only  giant  strength  could 
sustain.  Being  essentially  injurious,  it  is  less  injurious  to 
robust  nations,  just  as  a  course  of  dissipation  has  less 
effect  on  vigorous  constitutions ;  that  degree  of  plausi- 
bility may  be  allow^ed  to  the  points  just  considered.  But 
in  points  made  by  the  process  of  pitching  on  any  differ- 
ence discoverable,  no  matter  of  what  nature  (I  have  not 


POliEIG.V  COUN-1 RIES  AS   COMMERCIAL   RIVALS.       I55 

yet  heard  the  fact  that  they  talk  less  through  their  noses 
than  we,  so  adduced,  but  I  am  looking  for  it  every  day), 
as  a  reason  why  one  system  is  suitable  for  us  and  another 
for  Great  Britain,  there  is  little  after  all  that  is  entitled  to 
serious  treatment.  In  the  straws  at  which  drowning  men 
clutch,  the  amount  of  substance  has  no  necessary  relation 
to  the  vigor  of  the  clutching. 

INDUSTRIAL    INDEPENDENCE. 

Nothing  is  ever  said  on  behalf  of  protection  that  Is 
more  plausible  in  appearance,  more  seductive  or  sonorous, 
than  the  claim  that  it  promotes  independence.  "  Inde- 
pendence be  our  boast."  And  why  not,  forsooth  ?  What 
more  important  than  that  we  should  keep  ourselves 
independent  of  other  countries?  If  peaceful  relations 
should  be  broken  between  us  and  a  nation  on  which  we 
depended  for  necessaries,  would  not  this  leave  us  at  her 
mercy?  Would  not  the  knowledge  that  she  had  us  at 
this  disadvantage  tell  against  us  and  in  her  favor,  in  the 
settlement  of  international  misunderstandings?  The  pur- 
poses to  which  this  plea  might  be  put  were  early  recog- 
nized. Alexander  Hamilton  looked,  in  his  "  Report  on 
Manufactures,"  "  particularly  to  the  means  of  promoting 
such  as  will  tend  to  render  the  United  States  indepen- 
dent on  foreign  nations,  for  military  and  essential  sup- 
plies." A  great  many  things  will  be  very  different,  we 
are  permitted  to  hope,  when  the  millennium  arrives ;  but 
meanwhile  we  must  look  to  our  defences. 

Our  race  is  so  much  slower  in  reaching  the  same  stage 
of  progress  in  the  larger  aggregates  known  as  nations, 
than  in  the  smaller  aggregates,  communities  and  families, 
that  it  need  never  surprise  us  to  encounter  an  aphorism 
applied  with  serene  confidence  to  the  one  which  is  well 
known  to  be  false  for  the  other.    Precisely  the  same  reason- 


15^)        ECOMOAflC  AND   INDUSTKIAI.    DELUSIONS. 

ing  would  lead,  and  once  led,  families  to  keep  themselves 
independent  on  other  families  for  essential  supplies;  for 
behold,  there  are  sometimes  lawsuits  and  other  forms  of 
neighborly  difference  that  make  dependence  inconven- 
ient. But  no  one  now  applies  the  principle  in  these  cases, 
or  thinks  of  it.  Refusing  to  maintain  in  his  own  family 
the  industries  necessary  for  his  support,  the  citizen  gives 
them  over  with  prodigal  hand  (all  but  the  one  he  feels  best 
able  to  conduct)  and  takes  no  thought  of  the  risk  he  is 
running.  As  a  matter  of  experience  he  finds  his  family 
not  only  better  maintained  by  this  course,  but,  strangely 
enough,  actually  safer  in  life  and  property.  If  we  doubt 
this,  let  us  remember  the  feudal  barons  who  used  to  culti- 
vate such  an  independence,  who  succeeded  in  maintaining 
a  degree  of  it  quite  unsurpassed  at  this  day,  and  who 
gained  no  security  by  it. 

The  irrationality  of  this  plea  for  independence  appears 
in  its  exclusive  attention  to  one  side  of  a  transaction,  and 
obstinate  disregard  of  the  other  side.  Suppose  that, 
guided  by  economy  and  nothing  else,  we  form  a  habit  of 
buying  some  article  in  some  foreign  market.  This  makes 
us,  according  to  the  accepted  way  of  putting  things,  "  de- 
pendent "  on  the  foreign  source  of  supply,  to  the  extent 
of  our  demand  for  the  article.  But,  as  we  have  seen 
again  and  again,  it  is  impossible  for  us  to  form  such  a 
habit  without  forming  at  the  same  time  the  habit  of  send- 
ing abroad  to  foreign  consumers  something  that  we  would 
not  send  otherwise  ;  nor  can  the  nation  of  which  we  buy 
possibly  get  into  the  habit  of  supplying  us  without  get- 
ting at  the  same  time  into  the  habit  of  buying  abroad 
something  of  the  same  value,  which  it  would  otherwise 
produce  at  home.  Such  is  the  rule,  ample  proof  of 
which,  in  reason  and  in  experience,  I  have  already  given ; 
a  rule  which  must  necessarily  be  obeyed,  if  transactions 


FOREIGN  COUNTRIES  AS  COMMERCIAL   RIVALS.       1 57 

between  different  countries  are  not  to  lead  to  monetary 
disturbances.  So  that  even  if  we  admit  for  the  moment 
that  buying  clothes  in  Great  Britain  renders  us  "  depen- 
dent "  to  that  extent  on  Great  Britain,  we  must  include  in 
the  same  view  our  rendering  some  foreign  nation  (Great 
Britain  herself,  perhaps)  dependent  on  us  to  the  same  ex- 
tent for  something  imported  from  us,  and  rendering  Great 
Britain  dependent  on  some  other  nation  (ourselves,  when 
this  act  is  the  same  as  the  one  last  mentioned)  for  some- 
thing she  needs — say  breadstuffs.  To  those  who  take 
superficial  views  of  the  matter,  this  may  wear  the  appear- 
ance of  substituting  an  uncertainty  for  a  certainty.  But 
it  is  not ;  no  such  doubt  rests  upon  our  law  of  trade.  As 
soon  as  foreign  markets  fail  for  our  surplus  products,  pur- 
chases must  fall  off  to  the  same  extent ;  or,  if  the  form  be 
preferred,  the  same  cause  that  loses  us  the  power  of 
making  some  foreign  nation  dependent  on  us,  emanci- 
pates us  equally  from  dependence  on  some  foreign  nation. 
Any  assurance  of  our  own  independence,  on  the  contrary, 
must  at  the  same  time  free  some  of  our  dependents. 
Losses  and  gains  balance,  as  trade  itself  balances. 

Hence  it  is  plain  that  the  alternative  to  the  indepen- 
dence sought  by  Hamilton  is  not  a  one-sided  dependence, 
but  an  interdependence.  Which  should  we  choose  ?  The 
soundest  wisdom  makes  the  same  choice  when  dealing 
with  fellow-men  of  other  nationalities  as  with  fellow-men 
under  our  own  flag,  and  for  the  same  reasons ;  to  inde- 
pendence, isolation,  and  hostility  it  prefers  interdepen- 
dence, commerce,  and  peace. 

PROTECTIOX    A    FOE    TO    TRUE    INDEPENDENCE. 

Having  shown  that  the  kind  of  independence  to  which 
the  system  of  protection  would  guide  us  is  not  worth  its 
heavy  cost — nor  even  worth  having  at  any  cost, — I  might 


15^         I'.CONOMIC  AND   INDUSTRIAL   DELUSIONS. 

be  content  to  let  the  question  rest.  Ikit  independence 
has  a  moral  aspect  which  concerns  us  more  deeply ;  there 
is  a  moral  independence  which  protection  is  notoriously- 
helpless  to  win  for  us.  It  is  especially  important,  then,  to 
show  how  and  why  that  system  has  in  fact  a  tendency 
directly  opposite :  to  restrict  the  independence  and  en- 
feeble the  self-reliance  of  the  people  under  its  dominion. 

As  proof  that  such  a  tendency  exists,  one  or  two  out  of 
the  many  facts  that  might  be  adduced  will  sufifice.  No 
attentive  observer  has  failed  to  remark,  for  instance,  the 
great  difference  between  partisans  and  opponents  of  pro- 
tection, in  the  stress  they  lay  on  the  views  and  washes  of 
other  countries  as  factors  that  should  influence  our  own 
course.  To  those  advocating  lower  duties,  the  opinion  or 
desire  that  people  across  the  Atlantic  may  happen  to  have 
upon  the  subject  never  suggests  itself  as  a  determining 
motive,  ^rc  or  confra.  Whatever  advice,  whether  friendly 
or  hostile,  they  may  be  disposed  to  give  us,  we  are  aware 
that  they  are  not  in  a  position  to  understand  all  that  is 
inv^olved  in  our  problem  ;  so  that,  ready  though  we  should 
always  be  to  profit  by  their  experience  under  similar  con- 
ditions, we  are  unable  to  make  advantageous  use  of  their 
advice,  and  may  therefore  give  it  little  heed  in  fixing  on  a 
national  policy.  The  protective  school,  on  the  contrary, 
seems  to  be  chronically  nervous  on  the  subject.  To  that 
very  advice  from  the  foreigners  (more  particularly,  it  may 
be  added,  from  such  foreigners  as  may  be  qualified  by 
lack  of  reflective  power  and  insular  narrowness  to  give 
advice  that  is  really  serviceable)  it  is  perpetually  calling 
attention,  as  though  by  it  the  wise  citizen  should  govern 
his  judgment.  We  are  not  more  truly  dependent  on 
others  when  we  blindly  follow  than  when  we  doggedly 
shun  the  course  into  which  they  would  direct  us  :  in  being 
persuaded  than   in  being  deterred   by  them.     Whatever 


FOREIGN  COUNTRIES  AS   COMMERCIAL  RIVALS.      1 59 

the  increases  it  might  bring  in  foreign  purchases  of  woollen 
goods  or  pig-iron,  there  is  more  genuine  independence  and 
self-reliance  in  the  policy  that  trusts  to  reason  and  values 
the  experience  above  the  sentiments  of  foreign  countries, 
than  in  the  one  that  is  based  on  intimidation  of  the 
thoughtless  by  heaping  up  great  masses  of  supposed 
European  sentiment,  buttressed  with  garbled  extracts 
from  the  English  press. 

A  word  as  to  those  garbled  extracts,  before  going  fur- 
ther. We  have  not  simply  to  consider,  in  applying  the 
epithet,  passages  whose  meaning  has  been  distorted 
through  suppression  of  explanatory  clauses— leaving  alto- 
gether out  of  view  such  brazen  forgeries  as  those  exposed 
during  the  presidential  campaign,  and  their  like  that  have 
not  yet  ceased  to  appear,  in  diminished  numbers, — but 
along  with  them  the  multitude  of  whose  correctness  as 
reprinted  no  question  has  been  raised.  To  garble  a  quo- 
tation is  to  present  it  so  that  it  will  leave  a  false  impres- 
sion ;  and  that  is  exactly  what  is  done  when  an  occasional 
paragraph,  painfully  unearthed  from  its  concealment  be- 
neath a  heavy  mass  of  overlying  matter,  is  exploited  as 
indicating  the  present  deliberate  policy  of  a  whole 
nation. 

Truth  requires  a  more  vivid  realization,  displeasing 
though  it  be  to  our  national  self-consciousness,  of  the 
stern  fact  that  our  kin  beyond  sea  are,  as  a  rule  all 
but  universal,  profoundly  uninterested  in  our  great  and 
glorious  republic.  This  fact  impresses  itself  upon  any 
one  who  turns  over  the  pages  of  an  English  daily  or 
weekly  paper.  Columns  of  detail  are  always  conspicuous, 
about  the  concerns  of  half-barbarous  hordes  among  the 
Balkans,  or  wretched  fellahin  on  the  Nile,  or  a  dozen  or 
two  crowned  or  titled  nonentities,  while  our  own  pro- 
gressive and  important  land  is  put  off  with  a  few  para^ 


irV)         F.CONOMfC  AA^n    INDUSTRIAL   DELUSIONS. 

graphs  in  a  back  column — hardly  that,  except  when  some 
such  incident  as  the  Sackville  trouble  involves  their  own 
government  or  titled  class  at  the  same  time.  Tourists 
will  remember  the  diet  from  which  they  have  sometimes 
had  to  draw  what  nourishment  they  could,  while  in  a 
foreign  land  and  hungering  for  news  of  their  own.  When, 
not  very  long  ago,  the  Tribune  became  jubilant  over  its 
verification  of  a  challenged  citation  from  the  London 
Times,  the  fact  that  was  really  most  significant  was  that 
it  had  had  to  search  "  in  the  thirty-sixth  line  of  the  fourth 
column  "  of  an  issue  more  than  ten  years  old.  The  Times 
has  since  then  published  a  half  dozen  columns  of  heavy 
editorial,  in  more  than  three  thousand  issues ;  and  yet 
the  Protectionist  has  to  go  behind  or  under  it  all,  to  grub 
out  the  sentence  which  he  thrusts  before  the  American 
voter  as  displaying  and  embodying  the  dearest  desire  of 
the  British  heart  to-day  !  He  is  glib  enough  with  his 
explanation  that  their  failure  to  make  more  frequent 
mention  of  this  dearest  desire  of  theirs,  proves  not  that  it 
is  no  longer  entertained,  but  that  they  have  only  grown 
more  diplomatic  with  it — an  explanation  which,  ridiculous 
though  it  is  with  such  as  have  any  knowledge  of  British 
papers,  has  doubtless  some  weight  with  such  as  know 
them  only  by  misrepresentation — but  a  diplomacy  which 
hides  its  morsel  of  treasure  under  such  a  mountain  of 
detritus  is  hard  indeed  to  distinguish  from  indifference. 
Such  quotations  from  the  London  Times,  unaccompanied 
by  information  how  often  their  purport  is  to  be  found  in 
the  Times,  and  how  prominent  a  place  is  there  allowed 
them,  are  intended  to  create  false  impressions,  and  are 
therefore  garbled,  no  matter  how  accurately  the  original 
words  may  be  reproduced. 

Another  and  a  very  forcible  illustration   is  seen   in  the 
attitude  toward  (nir  own  precious  McKinley  act  on  the 


FOREIGN  COUNTRIES  AS   COMMERCIAI    RIVALS.       l6l 

Continent,  compared  with  that  in  Great  Britain.  Pro- 
tected Vienna  is  said  by  cable  dispatches  to  be  greatly 
disturbed  by  it  ;  protected  Paris  is  feverish,  and  ready 
for  measures  of  retaliation  ;  protected  Ottawa  joins  the 
growling  chorus  ;  free-trade  London  remains  placid  and 
unmoved.  At  a  meeting  in  Sheffield,  said  act  is  reported 
to  have  been  discourteously  handled,  and  this  report  is  to 
all  Protection  "  as  the  shadow  of  a  great  rock  in  a  weary 
land  "  ;  but  in  the  same  breath  \\nX\\  which  it  is  insisted 
that  those  unnamed  Sheffield  citizens  were  endowed  with 
more  sagacity  in  forecasting  the  effect  to  be  expected 
from  our  latest  protective  accession  than  are  most 
American  statesmen,  we  hear  the  confession  that  said 
citizens  must  have  been  little  better  than  simpletons  for 
dreaming  that  their  criticisms  could  possibly  have  any 
practical  effect.  This  latter  position  is,  I  dare  say,  an 
impregnable  one ;  but  how  can  it  and  the  other  be  occu- 
pied at  the  same  time  ?  The  stress  laid  upon  this  supposed 
Sheffield  meeting  is  good  evidence  that  Protection  has 
nothing  more  momentous  to  offer  us,  and  that  England 
views  the  terrific  stroke  aimed  by  McKinley  at  her  as  a 
blow  in  the  air — effective  only  on  the  arm  that  deals  it. 

The  Pan-American  Conference  has  already  been  dis- 
cussed, but  a  stronger  emphasis  ought  to  be  laid  on  the 
attitude  of  England  with  regard  to  it.  Consider  the 
situation  :  the  trade  with  Latin  America  almost  wholly  in 
English  hands,  a  few  German  vessels  serving  barely  to 
call  attention  to  England's  superiority,  and  France  hardly 
enough  in  the  race,  so  to  speak,  to  come  in  for  a  share  of 
the  gate-money  ;  another  nation  steps  into  the  arena  with  a 
device  advertised  as  certain  to  win  every  time,  and  threat- 
ens to  sweep  this  great  prize  of  a  continent's  commerce 
into  its  own  net  ;  and  behold,  the  country  with  least  at 
stake — being  a  protected  country^ — ^takes  alarm,  while  the 


l62         ECONOMIC  AND   lArDirsTRlAL   DF.I.VSION!^. 

one  with  most  at  stake — being  delivered  from  the  pro- 
tective incubus — looks  on  indifferent !  Is  this  insensi- 
bility ?  The  proverbial  British  stolidity  ?  Never ;  no 
nation  so  instantly  sensitive  as  the  British,  when  any 
question  arises  that  really  involves  its  commercial  inter- 
ests. If  any  one  has  a  more  reasonable  solution  of  this 
significant  calm  in  the  British  mind  than  the  conscious- 
ness of  the  nation  commercially  most  successful  in  all 
human  history,  that  her  success  was  not  to  be  disturbed 
by  violent  plunges  in  false  directions,  or  in  any  other  way 
than  by  following  the  path  of  free  trade,  which  had  led 
her  to  the  front — certainly  no  one  has  yet  promulgated 
it.  On  this  point,  as  on  others,  moral  independence 
belongs  not  to  the  protected  nation.  It  purchases 
security  against  imaginary  perils,  and  the  price  it  pays 
is  a  life  weighed  down  by  unrespited  apprehension  of 
other  nations. 

Dependence  on  a  foreign  country  is  as  truly  illustrated 
by  bumptiousness  as  by  subserviency  toward  it,  as  H.  C. 
Lodge  recently  pointed  out  in  an  essay  on  "  The  Colonial 
Spirit."  The  protective  superstition,  ascribing  to  gov- 
ernment a  wizard's  magic  power,  and  expecting  of  the 
means  at  its  command  an  increased  prosperity  for  favored 
classes  at  no  cost  to  other  classes,  may  very  possibly  have 
descended  to  an  otherwise  sane  and  sensible  people  from 
a  time  when  government  was  something  beyond  thxC  great 
seas,  superb  and  unapproachably  puissant,  and  the  fear 
which  meant  reverence  in  one  century  has  become  modi- 
fied into  the  fear  which  meant  abhorrence  in  the  next.  I 
do  not  insist  on  this  explanation  ;  but  I  do  insist  that 
only  in  emancipation  from  the  protective  superstition  can 
there  be  deliverance  from  the  bondage  of  foolish  appre- 
hensions. "  And  ye  shall  know  the  truth,  and  the  truth 
shall  make  you  free." 


CHAPTER  VI. 

PRICES    rs.    WAGES. 

No  position  is  held  more  stoutly,  or  with  greater  assur- 
ance of  impregnable  strength,  than  the  one  we  are  now  to 
approach.  It  has  long  been  taught,  and  is  yet  widely 
believed,  that  the  interests  of  the  manual  laborer  are  in 
some  way  bound  up  with  high  taxation  of  imported 
goods  ;  so  that  any  reduction  in  the  tariff  would  despoil 
him  of  all  he  most  values,  as  effectually,  naturally,  and 
inevitably  as  the  hero  of  old  was  shorn  of  his  surpassing 
powers  when  his  locks  were  cut.  Political  leaders  have 
not  neglected  to  spread  a  belief  so  convenient  for  their 
purposes  ;  and  one  of  the  most  conspicuous  among  them, 
in  his  speeches  during  the  presidential  campaign,  forced 
the  issue  to  the  very  front :  "  It  is  from  skin  to  core  and 
from  core  to  skin  again,  a  question  of  labor,"  he  told  us. 
Was  he  not  unduly  lavish  of  words,  seeing  that  the  rela- 
tion of  tariff  to  labor  is  completely  described  in  simply 
saying,  "  it  is  skin  and  skin  again  "  ?  However  that  may 
be,  I  willingly  admit  that  no  interests  in  the  question  are 
more  deeply  involved  or  more  important  than  those  of 
the  working  man.  I  even  admit  that  the  true  welfare  of 
our  working  classes  as  a  whole  ought  to  decide  it  without 
appeal.  Influenced  by  protectionist  fulminations  from 
the  stump,  one  might  see  in  these  admissions  a  complete 
abandonment  of  my  case  ;  but  any  one  who  carefully  sifts 
the  evidence  will  be  able  to  find  a  quite  substantial  deal 

163 


\Ck\.      kconomic  and  r.vnusT^'/AL  /)/:/.rs/OA'S. 

of  the  case  rcinainiii|^.  Let  us  first  consider  why  the 
protectionist  appeal  is  particularly  addressed  to  the 
laboring  man,  and  then  test  that  appeal  by  fact  and 
reason. 

]>ROTKCTIONIST    EFFORTS    TO    PERSUADE    THE    WORKING  MAN. 

Those  who  live  by  daily  toil  have  always  looked  like 
easy  game  to  the  demagogue  who  deals  out  mystification 
to  all  who  will  accept  it  for  argument  and  finds  in  inven- 
tion a  ready  supply  of  defects  in  his  array  of  facts  ;  and 
that  has  always  been  suflficient  to  ensure  them  his  obse- 
quious attention.  The  day-laborer — if  we  are  to  believe 
such  oracles  as  this — is  the  man  whose  prosperity  and 
happiness  are  considered  before  all  other  men's,  in  devis- 
ing and  upholding  a  high  scale  of  import  duties.  How 
the  mining  or  manufacturing  capitalist  is  affected  we 
might  be  permitted  to  doubt — he  may  gain  by  them  or 
he  may  not, — but  the  laborers  he  employs  would  die  a 
dozen  deaths  without  them.  When  his  agents  flock 
about  our  Congress,  as  they  never  fail  to  do  when  a  tariff 
bill  is  under  discussion,  they  always  keep  uppermost  the 
thought  of  the  laborer,  in  whose  behalf  they  unselfishly 
strike  two  blows  for  every  one  in  behalf  of  him  who  pays 
their  expenses  there  and  directs  their  efforts.  In  the 
legislation  they  procure  from  our  statesmen,  the  laboring 
class  is  of  course  the  favorite  beneficiary.  So  is  the  farm- 
ing class.  If  our  country  contained  some  other  class  as 
rich  in  votes  and  as  low  in  the  estimation  of  the  political 
managers — on  whose  stupidity  they  as  confidently  counted 
— that  other  class  would  also  be  the  favorite.  All  that  is 
asked  of  any  class  of  our  citizens  is  that  it  shall  not  know 
enough  of  political  economy  to  see  its  interests  for  itself ; 
the  managers  will  step  eagerly  forward  to  supply  all 
deficiencies,  by  proving  that  the  tariff  is  the  one  particular 


PRICES  VS.    WAGES.  1 65 

thing  to  it  most  precious,  that  the  tariff's  choicest  bless- 
ings are  poured  into  its  individual  lap,  and  that  each  was 
made  for  the  other. 

The  first  step  in  the  persuasion  of  the  laborer  is  usually 
to  call  attention  to  the  difference  between  the  rate  of 
daily  wages  here  and  in  some  other  countries — this  is  of 
course  grotesquely  exaggerated,  by  the  selection  of  in- 
stances calculated  to  be  striking  rather  than  fair, — and  the 
next  step  is  to  draw  the  conclusion :  "  If  trade  with  those 
other  countries  is  made  free,  wages  here  must  sink  to  the 
level  of  those  paid  there."  Before  that  conclusion  the 
poor  working  men  are  expected  to  submit,  meekly  and 
unquestioningly  :  "  Theirs  not  to  make  reply,  theirs  not 
to  reason  why  " — ^particularly  above  all  things  not  to 
"  reason,"  for  awkward  results  might  follow  their  asking 
by  what  necessity  wages  "  must  sink."  They  might  show 
many  an  instance  of  continued  free  trading,  which  has 
not  been  followed  by  closer  resemblance  between  the 
social  conditions  among  the  purchasers  and  those  among 
the  sellers.  Men  have  bought  freely,  for  years,  of  their 
Jewish  fellow-citizens  without  losing  their  taste  for  bacon. 
Or,  to  take  an  instance  more  to  the  point,  they  might 
show  that  the  labor  given  to  the  production  of  tea  is 
miserably  paid — beyond  almost  any  in  the  world, — and 
then  ask  their  protectionist  adviser  to  tell  them  how  much 
wages  have  fallen  in  this  country  since  we  put  tea  on  the 
free  list.  If  the  laborer  is  found  tractable  to  Protectionist 
persuasions,  it  is  only  because  he  has  not  learned  how  to 
question  them. 

DOES    FREE    TRADE    EQUALIZE    WAGES  ? 

From  the  easy  confidence  with  which  it  is  assumed 
that  increasing  the  volume  of  trade  between  two  countries 
tends  to  equalize  the  wages  paid   in  them,  it  might  be  be- 


lGf>         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

Hevcd    that    there  was    some   evidence   in    history  or  in 
reason  to  support  this  hypothesis.     There  is  not  a  shred. ' 
It  is  assumption  unmixed. 

1.  Trade  has  been  free  between  our  States  for  a  century. 
Had  the  hypothesis  any  truth  in  it,  all  difference  in  wages 
among  them  should  long  ago  have  disappeared.  In  fact, 
the  difference  between  different  parts  of  our  country — 
California,  or  New  England,  for  instance,  and  the  Carolinas 
— is  as  striking  as  can  be  found  anywhere,  and  such  differ- 
ence has  been  constantly  springing  up,  and  even  largely 
increasing,  since  the  Constitution  went  into  operation. 

2.  The  British  have  admitted  the  great  majority  of 
products  free  of  duty  for  forty  years.  Had  the  hypothe- 
sis any  truth  in  it,  the  condition  of  their  laborers  should 
have  been  growing  steadily  worse  all  this  time,  and  should 
now  rank  with  the  lowest  of  those  whose  products  they 
admit.  The  facts  are  that  higher  wages,  by  far,  are  paid 
in  Great  Britain  than  in  any  other  European  country, 
hours  of  labor  are  shorter  than  anywhere  else,  and  the 
ratio  of  improvement  in  the  condition  of  the  poorer 
classes  is  more  remarkable  than  can  be  found  in  the  whole 
world  besides — than  history  has  ever  shown.  The  degra- 
dation and  suffering  prevailing  in  England  before  she 
threw  off  the  shackles  of  "  corn-law"  protection  in  1846 
have  been  vividly  portrayed  for  us,  and  sung  in  "dolorous 
pitch  "  ;  echoes  of  the  song — ''  stitch,  stitch,  stitch,  in 
poverty,  hunger,  and  dirt,"  "  it  is  not  linen  you  're  wear- 
ing out,  but  human  creatures'  lives  "—are  still  ringing  in 
every  ear.  Ikit  wc  must  be  careful  not  to  argue  very  con- 
fidently from  the  distress  of  individuals,  for  of  this  every 
age  and  every  land  can  furnish  only  too  many  pathetic 
pictures.  Let  me  supply  a  few  figures,  which,  even  though 
less  graphic,  will  give  a  far  more  trustworthy  idea  of  how 
Britain  has  been  progressing.    Mr.  Giffen,  the  distinguished 


PRICES    VS.    WAGES.  1 67 

statistician,  tells  us  that,  wages  have  advanced  50  to  lOO 
per  cent,  in  England  during  the  last  fifty  years;  while  the 
hours  of  labor  have  been  reduced  fully  20  per  cent.,  being 
now  in  few  trades  over  ten  hours — in  most  of  them  nine, 
and  in  many  but  eight  hours.  More  than  that,  the  same 
wages  go  farther  in  procuring  necessaries,  bread  having 
become  20  per  cent.,  sugar  60  per  cent.,  and  clothing  on 
an  average  50  per  cent,  cheaper  there.  House  furniture 
is  also  much  lower  ;  and  the  working  man  pays  far  less  for 
far  better  light  and  for  far  more  satisfactory  means  of 
locomotion,  than  the  cost  of  the  inadequate  accommoda- 
tions of  those  days.  The  best  index  of  the  improved 
condition  of  the  masses  in  England  is  perhaps  shown  in 
the  consumption  of  certain  articles  of  food.  They  use  4 
times  the  weight  of  sugar,  6  times  the  number  of  eggs,  16 
times  the  rice,  3|-  times  fhe  tea,  per  head,  that  they  used 
fifty  years  ago.  The  improvement  in  their  dwellings  has 
not  lagged  behind  that  in  their  food,  for  the  effect  of 
better  sanitary  conditions  is  shown  in  a  marked  diminu- 
tion of  their  death-rate.  The  increase  in  their  savings- 
bank  investments,  and  those  in  co-operative  and  building 
societies,  is  noteworthy.  Two  items  relating  to  pauperism 
have  a  special  interest  for  us.  The  fraction  of  the  popu- 
lation receiving  poor-law  relief  was  4.42  per  cent,  in  1844, 
and  but  2.44  per  cent,  in  1888 — that  is  to  say,  after  cen- 
turies of  rigorous  protection  they  had  one  pauper  in  23, 
while,  when  these  had  given  place  to  twoscore  years  of 
trade  emancipated,  they  had  but  one  in  41.  The  propor- 
tion of  people  receiving  relief  has  meantime  increased  in 
our  highly  protected  country. 

This  beneficent  change  in  the  condition  of  the  English 
masses  is  studiously  concealed,  as  a  rule,  by  protectionist 
speakers  and  writers.  They  have  much  to  say  of  the 
similar  changes  among  ourselves,  and  then  this  reticence 


l68         ECONOMIC  AND   INDUSTRIAL    J)ELUS/ONS. 

of  theirs  permits  them  to  claim — -I  quote  literally  :  "  All 
this  comfort  and  general  improvement  are  the  result  of 
the  development  of  our  home  industries  by  protection, 
and  of  the  consequent  cheapening  by  home  competition." 
As  a  matter  of  fact,  the  "  general  improvement  "  has  been 
greater  in  the  free-trade  country,  although,  I  hasten  to 
confess,  the  difference  has  not  yet  been  sufficient  to 
balance  the  greater  difference  in  the  relative  condition  of 
the  two  countries  when  they  first  began  to  diverge  in 
their  commercial  policy.  The  masses  in  our  own  land  are 
still  at  some  advantage  over  those  in  the  mother  country; 
the  superiority  due  to  ampler  territory  and  better  popular 
education  has  not  yet  yielded  to  the  assaults  of  protection 
upon  it.  I  shall  not  imitate  the  folly  of  the  Protectionist 
by  ascribing  English  progress  entirely,  or  even  as  its  most 
important  factor,  to  better  revenue  laws.  It  is  undoubt- 
edly due  rather  to  the  agency  of  steam  and  electricity  and 
modern  inventions  applying  them,  in  cheapening  produc- 
tion and  especially  transportation  ;  a  blessing  which  has 
fallen  to  some  degree  on  all  countries,  but  most  particu- 
larly on  those  that  do  most  to  facilitate  commerce.  The 
undeniable  fact  that  England  has  received  more  benefit 
from  this  improvement  than  any  other  land,  and  that 
so  great  a  share  in  that  benefit  has  come  to  her  poorer 
classes,  she  certainly  owes  to  her  enlightened  policy  of 
free  trade,  and  this  fact  is  precisely  opposite  to  the  pro- 
tectionist hypothesis. 

3.  Of  the  low  tariff  of  New  South  Wales  I  have  already 
spoken.  If  the  hypothesis  w^e  are  examining  were  worth 
a  button,  the  condition  of  the  laboring  man  should  there 
be  particularly  debased.  The  testimony  is  all  to  the 
contrary.  To  quote  one  of  many  witnesses:  the  Govern- 
ment Printer  of  the  colony,  in  an  account  of  its  general 
condition  chiefly  compiled  from  official  documents,  claims 


PRICES  VS.    WAGES.  1 69 

that,  whatever  other  countries  may  boast,  ''  there  is  none 
where  those  who  live  by  the  sweat  of  their  brow  can  real- 
ize so  nearly  as  in  New  vSouth  Wales  the  paradise  of  their 
class — namely,  the  union  of  high  wages  with  short  hours, 
good  living,  and  a  fine  healthful  climate  ";  and  the  figures 
substantiate  his  claim.  The  tables  of  ordinary  wages  that 
he  furnishes  show  rates  decidedly  higher  than  those  paid 
south  of  Mason  and  Dixon's  line,  little  short  of  the  high- 
est paid  in  this  country,  and  fully  equal  to  ours,  on  the 
average,  the  country  through ;  while  the  prices  of  supplies 
show  no  important  differences — cheaper  there,  perhaps, 
but  very  slightly.  We  have  no  difificulty  in  finding,  there- 
fore, a  country  where  import  duties  are  reduced  almost  to 
the  British  scale,  with  a  condition  of  the  working  man  on 
the  average  superior  to  that  of  which  we  boast. 

4.  Duties  on  imports,  levied  in  this  country,  were  very 
small  until  the  present  century.  Were  the  hypothesis 
entitled  to  any  credit  whatever,  there  should  at  first 
have  been  little  difference  between  the  condition  of 
laborers  here  and  in  Europe.  The  fact  is  that  the  differ- 
ence was  quite  as  striking  then  as  now.  Secretary  Hamil- 
ton, in  his  great  "  Report  on  Manufactures,"  treats  it  as  a 
well-known  fact  (see  page  221  of  his  third  volume).  He 
is  an  unwilling  witness,  who  has  every  disposition  to  de- 
preciate a  circumstance  to  him  so  inconvenient,  and  would 
evidently  leave  it  unnoticed  if  he  could.  He  pleads  that 
''  while  a  careful  comparison  shows  that  there  is,  in  this 
particular,  much  exaggeration,  it  is  also  evident  that  the 
effect  of  the  degree  of  disparit)-,  which  does  truly  exist,  is 
diminished  in  proportion  to  the  use  which  can  be  made  of 
machinery."  After  showing  how  a  machine  may  enable 
{aw^  men  to  do  the  work  of  ten  or  more,  he  argues  that 
this  "  diminishes  immensely  one  of  the  objections  most 
strenuously  urged  against  the  success  of  manufactures  in 


I/O         KCOXOMIC  AXn    INDUSTRIAL    D/:  I  irsiONS. 

the  United  States."  Could  Hamilton  liave  been  told  that 
the  "  disparity  "  he  found  so  <^reatly  in  his  way  Avould 
come  in  time  to  be  viewed  as  the  effect  of  changes  brought 
about  long  after  his  day  (for  protection  was  not  made  a 
national  policy  in  our  legislation  before  i8i6),  would  he 
not  have  been  astounded  ?  The  doctrine  that  high  duties 
have  any  part  whatever  in  keeping  up  the  wages  of  labor 
is  unknown  where  people  have  easy  access  to  other 
countries  by  travel  ;  and  our  histoiy  shows  that  it  was 
unknown  here  in  our  relatively  isolated  country,  until  the 
nuisance  had  been  of  so  long  standing  that  there  were 
none  to  remember  how  we  fared  while  free  of  it. 

Thus  does  the  hypothesis  that  free  trade  between 
countries  has  the  effect  of  equalizing  the  wages  they  pay, 
utterly  fail  under  every  practical  test  to  which  it  can  be 
subjected.  But  as  this  doctrine  is  needed  to  support 
Protection's  bid  for  the  laboring  man's  vote,  a  vote  that 
must  be  had  by  one  means  or  another,  it  will  continue  to 
be  taught.  It  is  one  of  the  doctrines  that  do  not  need 
any  reasoning  to  support  them  ;  quite  enough,  that  the\- 
bring  money  to  some  man's  pocket 

HOW    WAGES    ARE    FIXED. 

Protectionists,  I  have  found,  rarely  profess  to  be  guided 
by  experience  on  this  point,  but  lean  usually  on  assump- 
tion. An  instance  of  this  is  seen  when  they  put  a  manu- 
facturer on  the  stand,  and  have  him  depose  as  follows  : 
''  I  confess,  I  am  selling  my  wares  for  higher  prices  than 
English  makers  ask.  If  I  had  to  compete  with  the  Eng- 
lish unprotected,  it  would  be  necessary  for  me  to  pay  my 
hands  less  than  I  am  now  paying.  Otherwise  I  must  close, 
and  leave  them  without  employment."  All  this  is  gravely 
set  before  the  guileless  laboring  man  and  gaping  rustic, 
who  are  expected  to  take  it  in  at  face  value,  without  any 


PRICES  VS.    WAGES.  I7I 

allowance  for  the  facts  that  even  practical  men  are  often 
deluded,  and  that  almost  any  man  is  prone  to  put  power- 
fully the  side  of  a  question  on  which  he  sees  his  own 
interests  ;  so  that  his  testimony  may  after  all  mean  noth- 
ing more  than  that  the  manufacturers  do  not  know  all 
they  think  they  know,  or  else  that  they  are  getting  a 
pretty  good  thing  by  making  their  customers  pay  more 
than  the  worth  of  their  goods,  and  hate  to  give  it  up.  It 
is  defective  in  another  way  ;  for  the  reduction  of  expenses, 
that  freer  trade  would  be  certain  to  bring  about,  is  not  sug- 
gested. I  have  already  shown  that  many  manufacturers 
would  save  more  in  reduced  cost  of  raw  materials,  were 
import  duties  abolished,  than  they  would  lose  in  reduced 
price  or  reduced  sale  of  product.  Nor  is  any  attention 
called  to  the  fact  that  the  manufacturer  is  now  paying  his 
hands,  as  a  rule,  the  smallest  price  that  will  prevent  them 
from  seeking  other  employment.  Competition  exerts  its 
full  force  on  him  in  that  way,  under  present  conditions. 
It  may  happen,  in  rare  instances,  that  philanthropy,  or 
the  liberality  that  sometimes  comes  with  prosperity,  in- 
duces the  employer  to  pay  some  of  his  men  more  than  he 
is  obliged  to  pay  ;  but  workmen  usually  know  very  much 
better  than  to  believe  in  the  real  existence  of  the  state  of 
things  represented  :  that  the  manufacturer  is  paying  them 
something  extra  because  he  can  afford  to.  Patrick  replied 
to  his  employer,  we  remember,  when  advised  to  vote  with 
the  Republicans  if  he  wanted  better  wages  :  "  And  if  you 
thought  the  Republicans  were  after  raising  my  wages, 
you  would  be  voting  for  the  Dimmicrats  yourself."  The 
theory  of  wages  based  on  the  testimony  of  interested 
capitalists  is  chiefly  remarkable,  therefore,  for  its  glaring 
omissions. 

The  wages   in   one  trade   depend    on  what  is   paid    in 
others  ;  and  that  wages  could  not  be  lowered  generally  by 


1/2         KCONOMJC  A.yj)   INDUSTRIAL    DELUSIONS. 

free  trade  across  the  frontier,  becomes  very  clear  when  we 
remember  the  laws  by  which  such  trade  is  necessarily 
governed.  Commerce  between  nations  is  interchange  of 
product  for  product.  As  already  shown,  if  any  specie 
passes  in  these  transactions,  it  goes  in  obedience  to  a 
law  of  supply  and  demand  that  custom-houses  cannot 
control,  from  the  country  in  which  it  can  at  the  time  be 
procured  with  less  effort  than  can  some  bulky  commodity, 
to  one  where  the  difference  is  the  other  way.  Specie  thus 
distributes  itself  exactly  as  do  other  products  of  labor, 
and  its  function  in  settling  balances  does  not  affect  the 
general  truth  that  International  Commerce  is  Barter. 
Since  every  purchase  of  a  foreign  product  is  therefore  a 
sale  of  one  of  our  own  products,  since  the  interchange 
takes  place  only  because  we  find  the  same  labor  more 
effective  when  put  on  the  product  sold  than  it  would  be 
if  applied  directly  to  the  product  bought,  the  action  that 
foreign  trade  has  upon  labor  is,  in  a  general  way,  to  in- 
crease its  productive  capacity.  If  a  difference  in  the 
wages  paid  to  laborers  in  two  countries  can  be  maintained 
with  a  small  volume  of  trade  between  them,  what  change, 
in  the  name  of  common  sense,  could  be  brought  about  by 
making  the  volume  larger?  Labor  would  thus  become 
somewhat  more  productive  in  each  of  the  two,  the  supply 
of  it  not  increased,  and  the  demand  certainly  not  dimin- 
ished in  either.  It  would  of  course  be  diverted  in  direc- 
tion ;  for  all  the  labor  before  spent  on  the  product  less 
advantageously  prepared  would  now  be  wanted  on  the 
product  which  has  to  be  sent  in  exchange  for  the  other. 
The  demand  for  labor  is  thus  inseparable  from  the  de- 
mand for  the  commodity — it  occurs  where  the  commodity 
is  demanded.  What  then  could  possibly  lower  its  price, 
in  either  country?  Free  trade,  in  fact,  by  insuring  the 
greatest    productiveness   of  labor,   the    greatest    possible 


PRICES  VS.    WAGES.  1 73 

utility  in  its  employment,  naturally  calls  out  a  greater, 
not  a  less,  demand  for  it,  and  thus  improves  its  condition. 
Thus  does  sound  theory,  as  it  inevitably  must,  confirm 
experience  and  illuminate  it. 

WAGES    IN    OTHER     COUNTRIES. 

The  criticism  of  "  much  exaggeration,"  applied  to  the 
differences  represented  to  exist  between  the  laborer's  con- 
dition here  and  in  some  other  countries,  is  even  better 
founded  now  than  in  Hamilton's  time.  We  must  now 
allow  for  the  reduced  purchasing  power  of  money  in  the 
United  States,  which  we  owe  to  the  protective  system. 
Statesmen  are  so  eager  for  legislation  to  bring  25  per 
cent,  more  specie  into  the  country  that  they  overlook 
the  fact  that  this  accumulation,  were  there  any  possibility 
of  obtaining  it,  would  only  reduce  the  purchasing  power 
of  every  dollar  we  hold,  making  it  do  just  what  eighty 
cents  before  did  ;  so  that  all  the  effort  spent  in  producing 
the  goods  whose  sale  brought  us  the  additional  25 
per  cent,  would  remain  as  good  as  wasted,  until  our 
bars  were  thrown  down  again.  Protection  undoubtedly 
decreases  the  real  value  of  money,  so  far  as  it  is  effective 
at  all.  The  money  price  of  things — their  value  in  gold  or 
silver — is  of  significance  only  to  purchasers  of  jewelry  and 
plate,  a  category  in  which  manual  laborers  are  not  in- 
cluded. For  them  the  only  question  that  has  any  signifi- 
cance at  all  is  how  much  their  day's  toil  will  bring  them 
in  the  articles  of  food,  and  clothing,  and  house  furniture, 
for  which  alone  they  undergo  it.  The  statistical  tables 
which  put  the  wages  of  common  laborers  in  England  (with 
skilled  laborers  there  is  less  difference)  on  a  level  with  the 
lowest  in  our  States,  and  but  half  those  prevailing  in 
New  England  or  the  newer  States,  would  present  a  quite 
different  appearance  if  they  showed,  instead  of  money,  the 


174        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

items  of  ordinary  consumption  ft^r  which  the  money  goes. 
As  the  retail  cost  of  woollen  goods  and  crockery,  of  knives, 
workmen's  tools,  stoves,  and  other  iron-ware  is  in  Eng- 
land very  much  less  than  is  here  exacted  for  them,  the 
reward  of  labor  there,  reckoned  in  these  necessaries,  ranks 
with  the  highest  here  allowed  it.  Calculating  the  number 
of  days'  work  that  have  to  be  given  in  England  for  the 
clothing  of  the  workman  and  his  family,  we  will  find  very 
few  parts  of  this  country  in  which  the  number  averages 
smaller.  So  for  house-rent,  and  local  taxes,  and  a  few 
kinds  of  food.  In  other  food-stuffs,  as  meats  and  flour, 
the  advantage  is  with  us,  as  our  prices  for  these  are  not 
higher.  It  would  have  to  be  with  all  other  articles  of 
daily  consumption  as  with  these,  to  make  the  money  rates 
of  wages  a  fair  subject  of  comparison. 

A  good  deal  has  been  said  about  the  distress  of  working 
people  in  the  older  countries,  and  the  Nciv  York  Tribune 
a  few  years  ago  sent  over  a  special  commissioner  to  Great 
Britain  for  the  purpose  of  hunting  up  as  much  of  such 
distress  as  he  could  find.  It  is  very  well  known  that  the 
privations  among  the  laboring  classes  of  the  protected 
nations  of  Europe — Germany,  Spain,  Italy,  Russia — far 
exceed  those  discoverable  in  Great  Britain ;  but  the 
Tribune  man  was  not  sent  to  look  into  those,  and  accord- 
ingly never  mentioned  them,  allowing  all  the  ugly  par- 
ticulars that  he  found  to  pass  as  the  natural  state  of  affairs 
in  a  free-trade  country.  I  do  not  dispute  the  facts  adduced 
by  this  traveller — he  was  Robert  P.  Porter,  now  chief  of 
the  Census  Bureau — in  the  least.  Very  similar  facts, 
quite  as  indisputable,  have  been  set  forth  by  Henry 
George  in  a  series  of  papers  on  the  mining  districts  of  my 
own  State,  Pennsylvania.  Distress  among  the  poor  has 
only  to  be  looked  for  to  be  found ;  and  though  some  of 
this  mav  be  chargeable  to  the  exactions  of  grinding  task- 


PRICES  VS.    WAGES.  175 

masters,  and  more  of  it  to  unequal  and  unjust  taxation, 
it  is  too  often  tlie  inevitable  doom  of  ignorance,  improvi- 
dence, and  inebriety.  Could  the  British  working  man's 
self-respect  be  aroused  by  giving  him  more  knowledge, 
and,  more  than  all,  could  he  be  kept  a  stranger  to  the 
baleful  fascinations  of  the  gin-bottle,  future  roving  com- 
missioners would  have  a  far  harder  search  for  sombre 
material  to  fill  their  letters. 

LABOR    AND    '*  TRUSTS." 

One  condition  that  places  the  working  man  at  a  disad- 
vantage wherever  it  exists,  is  the  combination  of  produ- 
cers into  associations,  "  trusts,"  etc.,  to  keep  up  prices  by 
limiting  the  output.  The  visitor  to  the  anthracite  coun- 
ties will  often  find  the  mines  altogether  idle,  their  owners 
being  bound  by  an  association  to  stop  production  until  it 
can  be  resumed  without  danger  of  carrying  the  price  of 
the  coal  below  the  figure  desired.  The  miners  have  no 
other  employers  to  whom  they  can  go,  and  accordingly 
receive  nothing  while  the  stoppage  lasts.  A  similar 
limiting  of  production  by  shutting  down  of  works  and 
locking  out  of  men  is  occasionally  heard  of  in  other 
trades,  such  as  sugar-refining,  coke-burning,  etc.,  the  close 
combination  of  producers  permitting  this  wherever  it  is 
found  to  their  interest.  There  is  more  than  one  way  of 
bringing  this  about  ;  sometimes  a  "  strike  "  is  forced  on 
their  men  for  the  purpose.  Where  competition  is  free  the 
workmen  are  less  at  the  mercy  of  their  employers,  and 
employment  is  more  constant. 

No  legislation  can  be  in  the  interest  of  labor,  then, 
which  facilitates  these  combinations.  And  this  is  pre- 
cisely what  protection  does.  Protection  may  not  be 
responsible  for  the  anthracite  monopoly,  the  petroleum 
combine,  and  some  others  ;    but  since  its  essence  and  de- 


17^)         F.CO.YOA/fC  AND    INDUSTRIAL   DZ-./J'SmNS. 

clarcd  object  is  to  restrict  competition,  and  since  restric- 
tion t)f  competition  is  just  what  is  needed  to  give  the  as- 
sociations and  "  trusts  "  a  chance,  protection  has  certainly 
brought  into  being  a  great  many  of  these  agencies — thus 
encouraging  their  mission  of  running  up  prices  to  con- 
sumers on  the  one  hand  and  holding  the  laborer  in  duress 
on  the  other.  The  producers'  combinations  in  existence  a 
few  months  ago,  some  known  as  trusts,  others  as  associa- 
tions, unions,  etc.,  but  all  having  the  same  general  object, 
formed  a  list  extending  to  several  dozen  names  ;  each 
trust,  or  what  not,  depending  on  the  complaisant  ser- 
vices of  government  for  the  exclusion  of  foreign  competi- 
tion and  for  its  undisturbed  enjoyment  of  us  as  its  natural 
prey  ;  each  being  intrenched  behind  its  appropriate  ram- 
part of  protective  duty,  and  thus  enabled  to  make  its 
product  more  costly  to  Americans  than  to  Europeans. 

Protection,  as  an  incident  of  its  avowed  object,  must 
encourage  trusts ;  the  fields  in  which  it  works  are  clearly 
seen  to  be  thick-grown  with  trusts ;  and  yet  it  is  .again 
and  again  maintained  that  between  it  and  trusts  there  is 
no  connection.  After  striving  awhile  to  stifle  the  com- 
plaints which  these  industrial  excrescences  were  provok- 
ing, that  singularly  cogent  logician,  J.  G.  Blaine,  not  long 
ago,  made  a  brilliant  speech  in  which  he  cleared  protec- 
tion of  all  responsibility  for  them  by  proving  that  the 
"  Standard  Oil "  did  not  depend  on  any  tariff,  and  that 
trusts  existed  in  England.  I  am  told  that  one  of  his 
hearers  rode  away  from  the  meeting  in  deep  thought,  and 
was  not  aroused  from  the  spell  of  the  orator's  witching 
elot]ucnce  till  he  passed  the  door  of  a  humble  cabin,  built 
close  beside  a  foul  and  noisome  morass.  The  rider  paused 
in  his  course,  for  he  saw  a  duty  before  him.  Drawing  a 
few  breaths  of  the  malaria-laden  atmosphere,  he  asked  the 
cabin's  occupant  why  the  marsh    had  not   been  drained 


PRICES  VS.    WAGES.  IJ'J 

and  its  disease-producing  activity  abated.  "  Disease,  you 
say,  stranger?"  rejoined  the  rustic,  his  teeth  chattering 
with  the  ague :  "  My  daughter  had  the  measles  last 
month — a  bad  case.  You  don't  say  the  marsh  gave  her 
that  .f*  My  hired  man  died  about  the  same  time  from 
lockjaw — he  ran  a  sharp  rusty  nail  in  his  foot.  What  had 
the  marsh  to  do  with  that  ?  And  say,  stranger  !  They 
have  diseases  over  in  town,  don't  they,  where  there  aint 
no  marshes?"  The  stranger  could  not  reply.  He  would 
have  liked  to  talk  with  the  poor  peasant  on  the  political 
situation,  but  he  needed  no  assurance  that  his  disproof  of 
the  effect  of  tariff  on  trusts  would  here  find  a  ready 
convert ;  and  he  was  in  a  hurry  to  get  away. 

THE  IMMIGRATION  TEST. 

We  often  hear  a  cheap  and  flashy  attempted  proof  of 
the  blessedness  of  the  protective  system  to  the  laboring 
man,  in  the  number  of  immigrants  received  by  this  coun- 
try from  Great  Britain,  compared  with  those  it  returns 
thither.  Those  who  have  any  difficulty  in  comprehending 
this  phenomenon  should  turn  their  attention  to  the  still 
greater  influx  that  we  receive,  despite  the  bar  of  differ- 
ence in  speech,  from  protected  Germany  and  protected 
Italy ;  to  the  large  volume  of  emigration  westward,  from 
New  England  and  other  older  States ;  to  the  goodly 
throng  who  are  seeking  homes  every  year  in  New  South 
Wales.  In  none  of  these  cases  is  the  emigrant  in  search 
of  more  protection  ;  and  no  one  able  to  account  for  them 
has  any  trouble  over  the  large  immigration  to  this  country. 
Many  come  to  us  because  they  wish  to  live  under  free  in- 
stitutions, and  hate  kings  and  aristocracies  and  recruiting- 
ofificers.  Another  very  easy  explanation  is  found  in  the 
natural  preference  of  people  who  depend  for  food  and 
clothing  on  the  produce  of   the  land,   for  places  where 


I/S         ECONOMIC  AND  INDUSTRIAL  DELUSrONF;. 

there  is  more  land  to  be  had  to  places  where  there  is  less ; 
and  in  this  same  explanation  we  account  for  all  the  supe- 
riority that  there  really  is  in  the  condition  of  the  laborer 
here  over  that  in  the  mother-country. 

The  most  ardent  Protectionist  could  hardly  insist  that 
this  fact  is  irrelevant,  when  once  his  attention  is  called  to 
it — however  long  he  may  refuse  it  notice.  The  island  of 
Great  Britain  contains  <^o,000  square  miles,  and  its  popu- 
lation, allowing  five  persons  to  a  family,  is  a  little  over 
six  million  families.  That  gives  an  average  of  ten  acres 
to  the  support  of  each  family.  If  the  United  States 
(excluding  Alaska)  contain  3,000,000  square  miles  and 
13,000,000  families,  that  gives  us  150  acres  to  a  family. 
Suppose  that,  instead  of  bewildering  our  minds  by  trying 
to  grasp  whole  nations  in  a  thought,  we  simply  consider 
two  farmers,  one  of  whom  has  10  acres  of  land  and  the 
other  150;  and  ask  which  of  them,  other  things  being 
equal,  will  be  able  to  support  his  household  more  liberally, 
to  keep  up  the  steadier  demand  for  labor,  to  attract  unat- 
tached workmen.  Not  even  a  Protectionist  could  hesi- 
tate for  an  answer.  He  would  agree  with  me  that  even 
though  the  land  of  the  small  farmer  were  proportionately 
two  or  three  times  as  productive,  and  he  had  two  or  three 
times  more  money  to  spend  on  each  acre,  he  could  not 
raise  so  much  food,  and  could  not  be  expected  to  offer  so 
good  a  maintenance  to  his  dependants.  The  larger  far- 
mer might  make  many  mistakes  in  management  ;  might 
even  follow  very  wasteful  methods  of  husbandry,  without 
altogether  sacrificing  the  advantages  his  broader  acres  give 
him.  But  I  now  make  a  change  in  my  problem,  which 
will  hopelessly  separate  my  protectionist  friends  from  me. 
I  suppose  that  the  larger  farmer  has  a  custom  of  docking 
the  pay  of  those  of  his  hands  who  buy  at  any  but  his 
favorite    store  ;    protection    being   an    extension    of    the 


Prices  vs  wages.  179 

"  pluck-me  store  "  system.  This  little  supposition  at  once 
changes  everything.  Vanished  from  the  protective  sight 
are  all  the  effects  of  larger  fields,  larger  crops — nothing  is 
visible  but  this  custom  of  the  farmer's,  which  now  becomes 
the  sole  source  of  his  better  condition,  the  better  condi- 
tion of  his  hands,  and  his  ability  to  employ  more  of  them. 
That  I  believe  a  fair  statement  of  the  view  which  Protec- 
tionists profess  to  hold  ;  in  my  own,  this  farmer's  petty 
exaction  is  but  one  of  those  grievances  which,  however 
vexatious  and  needless,  may  yet  be  endured  because  not 
quite  oppressive  enough  to  counterbalance  the  benefit  his 
employes  enjoy  in  the  greater  productiveness  of  his  farm. 
Which  view  appears  more  reasonable  ? 

I  have  every  wish,  I  am  sure,  to  do  full  justice  to  this 
immigration  argument.  I  am  well  aware  that  it  has  great 
force  with  many  worthy  people,  who  exult  in  it  as  "practi- 
cal," and  seem  unable  to  see  it  in  its  true  character,  of  a 
contrivance  for  stifling  the  voice  of  common-sense.  The 
same  character  belongs  to  a  large  proportion  of  the  so- 
called  "  practical "  tests.  Is  there  anything  more  in  it 
than  this  :  "  Working  men  are  all  the  time  leaving  Great 
Britain,  a  free-trade  countr>%  and  coming  to  this,  a  pro- 
tected country,  while  very  few  go  in  the  opposite  direc- 
tion :  therefore,  experience  proves  protection  advan- 
tageous to  working  men  "  ?  It  would  not  change  the 
nature  of  the  argument  a  particle,  if  we  changed  its 
terms  as  follows:  "People  are  all  the  time  leaving  the 
Eastern,  or  the  Northern  States,  where  the  '  blizzard  '  is 
all  but  unknown  and  the  grasshopper  innocuous,  or  where 
alligators  and  black  snakes  and  scorpions  and  tarantulas 
are  strangers,  and  going  to  Kansas,  land  of  the  blizzard 
and  the  grasshopper  plague,  or  to  Florida,  home  of  those 
other  amiable  creatures,  while  comparatively  fe\t''  remove 
in   the   reversed   direction :    therefore   experience   proves 


i8o       /■:c()yoAr/('  and  industrial  dulusions. 

the  circumstances  I  have  mentioned  advantageous  to  the 
settler,  and  not  the  tribulations  which  they  are  represented 
to  be."  There  is  something  "  practical  "  for  you  !  In 
fact,  it  is  not  necessary  to  make  so  radical  a  change.  We 
need  only  call  attention  to  some  other  blessing  which  our 
country  enjoys  in  common  with  protective  tariffs — itj^ 
plenteous  gift  of  mosquitoes,  for  example.  No  reason 
can  be  discovered  by  human  ingenuity,  why  this  immi- 
gration test  should  prove  import  taxes  advantageous  and 
not  be  equally  effective  in  proving  the  same  thing  for 
mosquitoes — why  it  shows  that  one  kind  of  petty  blood- 
sucking attracts  immigrants  to  these  shores  rather  than 
the  other.  The  conclusion  I  draw  is  that  common-sense 
cannot  be  dispensed  with,  however  "practical"  we  under- 
take to  be ;  and  as  soon  as  we  use  that—  as  we  start  to 
inquire  whether  the  only  important  difference  between 
this  country  and  England  is  that  in  tariff  rates,  or, 
whether  there  may  not  be  other  differences  which  enter 
the  problem — we  are  on  the  track  I  have  just  marked  out. 
We  discover,  as  a  matter  of  fact,  that  there  was  quite 
as  remarkable  a  disproportion  between  immigrants  and 
emigrants  before  the  country  ever  began  to  "  protect." 

THE    WAGES    QUESTION    FROM    ANOTHER    STANDPOINT. 

The  argument  addressed  to  the  laborer  himself,  is 
always :  high  wages  are  a  result  of  high  tariffs.  The 
argument  used  in  other  quarters  is  :  high  tariffs  are  made 
necessary  by  high  wages.  An  identical  conclusion  is  thus 
reached  from  conflicting  premises :  we  must  increase 
duties  so  that  manufacturers  shall  pay  high  wages,  and 
increase  them  still  further,  because  manufacturers  have 
high  wages  to  pay.  The  tariff  is  made,  according  to  the 
exigencies  of  the  case,  to  pose  as  cause  and  as  cure  for 
the  same  condition.     Its  claims  to   be  accounted  a  cause 


PRICES  VS.    WAGES.  l8l 

of  the  working  man's  welfare  having  been  examined,  and 
proved  worthless,  its  suitability  as  a  remedy  has  next  to 
be  considered. 

Before  taking  up  the  question  of  a  remedy,  it  is  well  to 
make  sure  that  the  disorder  to  be  treated  has  a  real 
existence.  We  want  to  know,  in  the  first  place,  whether 
the  country  is  really  at  a  commercial  disadvantage  be- 
cause its  laborers  are  well  paid,  and  then,  the  precise 
nature  of  that  disadvantage.  No  protective  reasoner  ever 
admits  a  doubt  on  this  point.  He  seems  always  perfectly 
assured  that  the  country  with  scantily  paid  labor  has 
necessarily  the  best  in  any  free  competition,  and  that  it 
must  succeed  in  drawing  to  itself  every  kind  of  industry, 
unless  defensive  legislation  makes  mighty  efforts  to 
prevent  it.  He  assumes  without  question  that  well-paid 
labor  is  dear,  and  poorly  paid  labor  cheap,  as  though 
such  assumptions  were  self-evidently  true  instead  of  gen- 
erally false. 

CONTROL    OF    MARKETS    BY    CHEAP    LABOR. 

I  have  already  anticipated  my  response  to  the  cry 
that  the  community  paying  higher  daily  rates  for  labor 
is  in  danger  of  losing  the  market  for  all  its  productions, 
but,  feeble  and  hollow  though  it  sounds,  it  can  yet  lead 
the  wayfarer  astray,  if  not  completely  silenced.  No 
notion  so  inherently  silly  could  be  held  for  a  moment, 
did  it  not  bear  a  superficial  resemblance  to  some  prop- 
osition containing  truth :  that  proposition  being  in  the 
present  case,  that  if  two  producers  were  circumstanced 
exactly  alike  in  every  other  particular,  with  materials, 
tools,  and  other  necessaries  costing  just  equal,  and  if  each 
hour  of  hired  labor  had  precisely  the  same  ef^ciency, 
the  one  that  paid  lower  wages  for  that  labor  would 
have    the    advantage.       But    other    things,   as    a    matter 


I  82         ECONOMIC  AND   INDUSTh'tAL   DELUSION^. 

of  fact,  never  are  identically  equal,  as  supposed.  Access 
to  power-supply  and  cheapness  of  material  are  always 
factors  of  more  vital  importance  than  smallness  of  daily 
wages  per  hand,  and  the  effectiveness  of  a  day's  labor 
varies  so  widely  in  different  places,  that  the  proposition  is 
for  any  practical  purpose  worthless. 

If  we  are  guided  by  experience  rather  than  guesswork, 
we  shall  discover,  possibly  to  our  great  surprise,  that  if  a 
difference  in  rate  of  wages  establishes  itself  in  a  inaiiufactiire, 
between  txvo  places  allowed  to  trade  freely,  the  business  is 
more  likely  to  go  to  the  one  paying  higher  wages  than  to 
leave  it  for  the  one  paying  loiver.  Let  him  who  doubts 
this  invest  his  capital  in  factories  w^iere  lowest  wages  are 
paid  (in  Mexico,  for  instance,  where  they  are  from  lo  to 
1 5  cents  a  day),  and  see  what  profits  it  brings  him.  He 
can  no  more  draw  business  away  from  New  England, 
where  wages  are  high,  than  he  can  break  up  the  min- 
ing industries  of  California,  in  which  they  are  higher  yet. 
England  holds  fast  to  her  manufacturing  industries,  not- 
withstanding her  high  scale  of  wages  (as  compared  with 
countries  near  by)  and  her  free  trade ;  and  so  secure  is 
her  predominance,  that  it  is  not  unusual  for  the  Germans 
to  protest  that  they  are  obliged  to  protect  themselves 
against  a  country  whose  more  liberal  payments  attest 
and  insure  its  advantage.  There  is  no  mystery  about  the 
matter  at  all.  If  there  are  degrees  in  utter  absurdity,  the 
German  delusion  is  a  little  less  absurd  than  that  propa- 
gated in  this  country,  for  there  can  be  no  doubt  of  the 
general  principle  that  if  better  wages  are  paid  in  any 
place,  it  is  because  that  place  is  so  circumstanced  that  the 
same  time  spent  by  the  laborer  can  there  turn  out  a 
greater  quantity  of  product.  This  general  principle  is  very 
largely  true,  even  in  comparison  of  individuals.  When 
a  manufacturer  has  a  piece  of  work  on  which  his  profit  is 


PRICES  VS.    WAGES.  1 83 

to  be  particularly  low,  he  always  finds  the  best  economy 
in  assigning  it  to  his  best-paid  hand — for  that  hand's 
high  wages  are  paid  in  acknowledgment  of  a  skill  and 
energy  that  are  needed  in  turning  out  the  work  fast 
enough  to  pay.  Mr.  Shearman,  the  lawyer,  has  repeatedly 
said  that  the  only  competitors  against  whom  he  asked 
for  protection  were  those  receiving  the  highest  retainers 
— he  would  willingly  protect  himself  against  the  cheaper 
ones.  Would  not  other  professional  men  say  the  same 
thing  ? 

LABOR    NOT    OVERPAID    IN    THE    UNITED    STATES. 

That  the  wages  paid  to  laborers  in  the  United  States 
are  only  proportioned  to  their  greater  productive  capacity, 
is  evident  from  several  considerations. 

First,  direct  comparison  in  efificiency.  A  scientific 
gentleman  in  government  service,  who  had  lived  many 
years  in  Germany,  testified  that  wages  were  much  lower 
in  the  Eastern  part  of  that  empire,  but  that  "  four  men 
there  would  do  no  more  in  a  given  time  than  two  in 
Western  Germany,  or  than  one  in  the  United  States."  The 
same  inferiority,  though  less  marked,  has  been  found  in 
England — as  compared  with  this  country,  but  not  as 
compared  with  Germany.  A  comparison  of  American, 
English,  and  Swiss  cotton  mills  shows  that  in  the  first  a 
single  workman  generally  runs  six  or  eight  looms,  in  the 
second  three  or  four,  and  in  the  third  but  two  ;  conse- 
quently, while  the  United  States  stand  first  in  order  of 
daily  wages,  they  are  so  far  ahead  in  efficiency  that  the 
order  of  labor-cost  is  exactly  reversed — highest  in  Switzer- 
land, lowest  here. 

Second,  our  more  extended  use  of  machinery,  and 
greater  skill  with  it.  I  have  seen  it  proved  that  nail- 
makers  in  Germany  receive  one  fourth  the  daily  wages  paid 


1 84         ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

their  craft  in  this  country ;  but  it  is  evident  that,  as  our 
works  turn  out  habitually  much  more  than  four  times  the 
number  of  nails  to  each  workman,  labor  on  nails  should 
properly  be  said  to  be  cheaper  with  us. 

Third,  the  greater  purchasing  power  of  money  in  other 
countries,  already  spoken  of. 

Fourth,  even  if  we  knew  nothing  of  the  foregoing  con- 
siderations, the  fact  would  yet  be  conclusively  proved  by 
this:  that  we  succeed  in  selling  some  of  our  products 
abroad,  constantly,  notwithstanding  our  protective  sys- 
tem, in  the  teeth  of  the  world's  competition.  This  would 
not  be  possible,  were  the  cost  of  our  labor  on  those 
products  greater  in  comparison  with  its  productiveness. 
Nor  could  we  maintain  a  greater  relative  labor-cost  on 
other  products,  or  they  a  less  cost,  for  any  tendency  to 
set  up  such  a  state  of  things  would  be  met  by  a  transfer 
of  capital  and  labor  from  the  less  to  the  more  productive 
enterprise.  To  illustrate :  notwithstanding  the  higher 
cost  of  transportation  (so  much  of  it  being  overland) 
wheat  from  Dakota  is  sold  in  English  markets  in  competi- 
tion with  the  India  product.  It  is  perfectly  certain,  then, 
that  the  labor-cost  of  producing  a  bushel  of  wheat  to  the 
Dakota  grower  must  be  smaller,  despite  his  payment  of 
ten  times  the  daily  rate  of  wages  ;  to  any  one  who  seriously 
inquires  into  the  methods  of  production  in  Dakota  and 
India,  and  the  comparative  efificiency  of  a  workman  in 
the  two  regions,  this  is  not  at  all  a  paradox.  It  is  plain 
that  in  this  industry  higher  wages  continue  to  be  paid 
without  any  protection,  and  that  the  reason  is  the  greater 
effectiveness  of  the  labor.  Now  my  present  point  is 
that  the  same  must  be  true  in  other  industries  as  well ; 
for  if  the  making  of  tools,  clothes,  etc.,  here  cost  more  for 
labor  than  the  product  is  worth,  by  the  wheat-growing 
standard,  more  people  would  leave  the  business  and  set 


PRICES    VS.   WAGES.  1 85 

at  raising  wheat  in  Dakota ;  while  if  labor  on  wheat-grow- 
ing were  exceptionally  unproductive  in  India,  people 
there  would  forsake  it  for  industries  that  paid  better. 
The  difference,  that  is  to  say,  is  in  the  character  of  the 
labor  employed,  and  not  in  the  character  of  the  employ- 
ment given  it. 

I  must  give  a  little  more  space  to  this  last  point,  be- 
cause it  appears  to  me  of  the  highest  importance,  and  is 
usually  overlooked.  How  it  might  be  with  us  if  we  had 
no  foreign  commerce  whatever,  it  is  useless  to  speculate, 
because  we  do  export  goods,  and  shall  assuredly  con- 
tinue to  do  so.  As  long  as  one  line  of  exports  is  steadily 
kept  up,  we  can  be  certain  that  on  labor  here  is  thrown, 
whatever  the  degree  of  protection  given  to  production  in 
other  lines,  the  full  force  of  the  competition  of  labor 
abroad ;  just  as  a  hole  kept  open  through  a  dam-wall  as 
effectually  insures  the  same  level  on  both  sides  as  though 
the  whole  dam  were  removed.  As  long  as  we  export 
wheat,  labor  on  wheat-growing  cannot  rise  above  the 
free-trade  level  ;  and  labor  on  other  things  cannot  rise 
above  the  level  made  by  competition  with  labor  on  wheat- 
growing,  being  thus  brought  to  the  same  standard  in- 
directly that  would  be  forced  on  it  directly,  if  it  were 
itself  naked  to  foreign  competition.  If,  by  free  trade,  we 
should  limit  production  in  other  lines  and  at  the  same  time 
stimulate  it  in  wheat-growing  (it  must  never  be  forgotten 
that  these  are  inseparable  parts  of  one  and  the  same 
process),  we  should,  of  course,  have  decreased  productive- 
ness in  the  former,  balanced  by  increased  productiveness 
in  the  latter ;  a  change  in  the  kind  of  labor  demanded, 
but  no  possible  falling  off  in  the  general  demand  for  it. 
Competition  is  not  increased  or  diminished,  against  the 
individual  laborer;  only  differently  directed. 

This  is  one  of  the  truths  to  whose  understanding  some 


1 86        ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

reflection  is  indispensable,  and  tlicrc  is  therefore  no  room 
for  surprise  that  it  has  been  so  slow  in  winning  recog- 
nition. It  is  easy  enough  to  treat  the  subject  in  a  way 
that  demands  no  reflection,  that  succeeds  best  without 
reflection,  that  is  an  affront  and  an  insult  to  reflection.  It 
is  easy,  for  instance,  to  confuse  the  labor-cost  of  the  article 
produced,  which  is  an  addition  to  its  price,  and  which 
does  put  its  producer  at  a  disadvantage,  with  the  daily 
earning  of  the  laborer,  which — except  for  the  feeble  in- 
fluence it  may  have  on  the  other — does  nothing  of  the 
kind ;  or  (if  you  choose)  to  assume  that  the  part  of  an 
article's  price  paid  for  labor  is  directly  proportional  to 
daily  wages,  without  inquiry,  and  in  face  of  glaring  facts 
incompatible  with  any  such  relation.  It  is  easy  to  assume, 
without  a  word  of  proof,  that  protection  adds  to  what  is 
paid  for  labor  in  some  trades  without  taking  off  as  much 
from  what  is  paid  in  others,  and  that  free  trade  could 
reduce  at  one  point  without  increasing  at  another.  It  is 
only  necessary  for  some  manipulators  to  stir  up  water  and 
oil,  import  taxes  and  high  wages,  to  boast  them  blended 
into  one. 

TWO    WAYS    OF    EXPRESSING    THE    SAME    IDEA. 

No  sincere — is  it  not  the  same  thing  to  say  unthinking? 
— Protectionist  ever  troubled  himself  to  define  precisely 
what  he  meant  in  repeating  his  well-conned  formula  that  we 
in  the  United  States  "  cannot  compete  "  with  some  other 
country  in  the  markets  of  the  world,  or  even  in  our  own 
markets,  without  some  artificial  support.  He  might  per- 
haps go  far  enough  to  explain  that  since  the  same  amount 
of  woollen  cloth,  say,  exchanges  for  a  smaller  amount  of 
money  in  England  than  here,  our  purchasers  would  no 
longer  buy  here  if  trade  were  free.     But  he  is  certain  not 


PRICES    VS.    WAGES.  1 87 

to  go  far  enough  to  draw  this  necessary  conclusion  :  that, 
since  it  is  just  the  same  thing  to  say  that  a  roll  of  cloth 
requires  a  smaller  weight  of  gold  to  buy  it,  as  that  an 
ounce  of  gold  sells  for  a  larger  roll  of  cloth,  his  facts 
would  not  be  changed  a  particle  if  he  said  that  gold  was 
cheaper,  reckoned  in  cloth,  in  the  United  States  ;  or,  since 
he  prefers  the  expression,  that  England  would  be  unable 
to  "  compete  "  with  us  in  furnishing  gold,  if  we  allowed 
those  of  our  citizens  who  had  it  to  sell  to  put  it  where 
they  could  get  cloth  for  it  on  as  favorable  terms  as  English 
sellers  of  gold  for  cloth.  This  is  plain  enough ;  a  moment's 
thought,  and  it  is  self-evident ;  but  what,  in  this  light,  be- 
comes of  the  contention  that  this  "  competing  "  is  a  result 
of  ill-paid  labor?  No  manual  labor  on  this  round  globe, 
probably,  is  so  highly  paid  as  that  given  to  the  production 
of  gold  in  this  country  ;  and  if,  by  the  very  terms  of  Pro- 
tection's own  statement,  we  can  nevertheless  produce  it 
more  cheaply  and  control  the  market  for  it,  we  need  not 
let  the  other  products  bother  us  much.  Each  country 
will  produce  what  it  can  produce  best,  if  not  interfered 
with  ;  and  differences  in  wages  will  survive  high  taxation, 
for  the  simple  reason  that  low  taxation,  or  even  free  trade, 
has  no  tendency  to  disturb  them. 

THE  LABOR  THAT  "  NEEDS  "  PROTECTION. 

That  the  withdrawal  of  protection  from  many  of  our 
industries,  especially  those  occupied  in  furnishing  the  raw 
material  of  other  industries,  would  result  in  their  tempo- 
rary contraction  or  partial  abandonment,  is  altogether 
probable  ;  though  every  loss  that  the  country  could  suffer 
in  that  way  would  be  more  than  made  up  to  it  by  the 
increased  activity  and  prosperity  of  the  industries  which 
would   be  thereby   enabled   to   provide  themselves  with 


t88      economic  and  imdustriai.  delusions. 

better,  cheaper,  and  more  abundant  raw  material.  This 
partial  sacrifice  of  the  cruder  industries,  I  am  bound  to 
say,  outrages  the  sense  of  justice  in  many  worthy  people, 
who  have  nevertheless  been  able  to  contemplate  some 
sacrifices  in  the  opposite  direction — as  that  of  the  copper- 
smelters  for  protection  to  the  mine-owners,  or  that  of  the 
canning  industry  for  protection  to  tin-plate — with  a  fair 
degree  of  equanimity.  ''  The  raw  material  manufac- 
turers," they  often  remind  us,  with  an  air  befitting  dis- 
coverers of  some  new  and  important  principle,  "  are 
entitled  to  just  as  much  favor  from  government  as  any 
manufacturers.  If  the  intervention  of  legislation  is  needed 
to  make  their  industry  self-sustaining,  they  ought  to  have 
it  granted  them."  I  accept  the  first  of  these  propositions 
with  all  my  heart ;  but  the  second  by  no  means  follows. 
It  is  a  mere  truism  that  all  manufacturers  have  an  equal 
title  to  government  aid,  seeing  that  no  one,  on  his  per- 
sonal account,  has  any  title  whatever.  The  government 
is  properly  concerned  only  with  the  well-being  of  its  citi- 
zens as  a  whole  ;  and  the  question  whether  the  great  body 
of  citizens  are  better  ofT  with  raw  materials,  and  conse- 
quently everything  that  is  made  from  them,  dear  or 
cheap — whether  there  is  more  general  benefit  in  scarcity 
or  abundance — is  one  that  none  need  hesitate  in  deciding. 
Labor  "needs''  protecting  in  exact  proportio)i  to  its  2ise- 
lessness.  A  liberal  share  of  our  protection  goes  to  sustain 
such  work  as  hauling  iron  ore  at  high  cost  from  Lake 
Superior  to  the  vicinity  of  the  coke-ovens,  when  it  might 
be  shipped  from  Spain  to  our  seaboard  at  lower  cost ;  or 
as  raising  wool  on  land  well  adapted  for  more  profitable 
production,  when  it  might  be  brought  in  ample  quantities 
from  land  which  has  no  better  use,  in  the  Argentine  and 
Australia.  On  enterprises  of  those  kinds  a  good  deal  of 
labor  is  employed,  doubtless  ;  but  the  effort  to  "  put  it  on 


PRICES    VS.    WAGES.  1 89 

an  equal  footing"  with  labor  more  judiciously  expended, 
by  hanging  a  burden  upon  every  one  who  makes  use  of 
the  latter,  is  exactly  as  if  we  tried  to  equalize  the  profits 
of  the  farmer  who  gets  out  his  potatoes  with  a  shovel- 
plow  and  the  one  who  persists  in  pulling  them  out  with  a 
hoe,  by  hobbling  the  first  with  some  special  tax.  The 
two  farmers  are  entitled  to  equal  regard  from  the  law  as 
citizens,  of  course ;  but  what  shall  be  said  of  an  attempt 
to  "  equalize  "  them  which  tramples  under  foot  the  rights 
of  those  in  whose  service  they  both  dig:  the  consumers  of 
their  product  ?  Pulling  out  potatoes  with  a  hoe  is  a  type  of 
the  kind  of  labor  that  protection  protects ;  the  kind  that 
has  to  be  favored  by  crippling  the  power  of  the  citizen  to 
serve  his  own  interest  and  that  of  his  customers  by  the 
use  of  some  better  kind.  Such  "  Protection  of  American 
Labor  "  has  as  its  object  an  increase  in  the  demand  for 
labor  where  it  will  serve  the  community  worse,  at  the 
expense  of  the  demand  for  it  where  it  will  serve  the  com- 
munity better.  One  of  the  measures  enacting  it  was  very 
suitably  described  by  a  leading  Republican  Congressman, 
in  the  days  before  the  party's  degradation  became  hope- 
less, while  yet  Republican  Congressmen  dared  so  to  talk : 
"A  bill  to  prevent  the  diffused  blessings  of  Divine  Provi- 
dence from  being  enjoyed  by  the  people  of  the  United 
States." 

INTEREST      OF      THE      LABORING      CLASS     IN      MECHANICAL      IM- 
PROVEMENTS. 

We  have  seen  the  laboring  man  presented  as  the  great 
beneficiary  of  the  tariff,  in  pure  generosity  to  whom  his 
employers  are  taking  all  the  trouble  they  do,  to  influence 
statesmen  in  the  lobbies  of  the  Capitol  or  to  buy  elections. 
When  we  strip  off  the  veil  of  humbug  and  false  reasoning 


190         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

we  find  that  his  alleged  gains  from  it  have  no  existence, 
while  he  pays  his  full  share  of  the  cost  in  increased  price 
of  necessaries,  and  is  in  reality,  his  ability  to  stand  the 
charge  considered,  the  chief  of  its  victims.  But  there  is 
one  more,  a  wider,  aspect  in  which  the  question  should 
be  viewed  before  we  leave  it.  Our  examination  has 
already  brought  out  one  unexpected  result ;  that  dear 
labor,  reckoned  in  cost  per  day  of  a  man's  service,  is  more 
apt  than  not  to  be  cheap  labor,  reckoned  in  cost  per  dol- 
lar's worth  of  product.  Another  unexpected  result  awaits 
us  :  that  the  general  effect  of  applianees  for  economizing 
labor,  for  making  it  go  further,  and  getting  the  same  thing 
with  less  of  it,  is  beneficial  not  only  to  society  at  large,  but 
most  of  all  to  the  laboring  class  itself.  Nothing  could  be 
more  contrary  to  one's  crude  first  impressions,  and  so 
strange  a  doctrine  would  find  none  to  credit  it,  did  ex- 
perience confirm  it  less  unmistakably.  The  invention  of 
a  new  machine,  by  whose  use  three  men  will  do  the  work 
before  done  by  ten — must  it  not  throw  the  other  seven 
out  of  employment  ?  Even  though  the  need  of  making 
the  machine  calls  for  some  additional  labor,  will  it  be 
nearly  enough  to  keep  seven  men  occupied,  and  will  the 
displaced  men  be  fitted  to  perform  it  ?  Is  it  not  a  hard- 
ship to  force  them  to  change  their  occupation,  when 
advanced  in  years  no  doubt,  even  though  we  suppose  a 
new  post  awaiting  every  one  ?  How  natural  these  ques- 
tions is  shown  by  the  working-men's  riots,  that  used  to 
take  place  half  a  century  ago,  against  the  introduction  of 
labor-saving  machinery.  But  the  machinery  came  in, 
nevertheless,  and  we  know  the  result.  Here  and  in  Great 
Britain  and  British  colonies,  most  where  most  machinery 
has  come  into  use,  the  great  body  of  working  people  are 
enjoying  in  daily  consumption  things  that  two  generations 
ago  were  luxuries  for  the  wealthy,  or  were  not  to  be  had 


PRICES    VS.    WAGES.  I9I 

for  any  money.  Why  is  this?  Why  is  it  that  the  laborer 
is  worse  off  in  Japan  and  India,  where  he  is  employed  for 
all  kinds  of  draught,  even  for  carrying  people  from  place 
to  place,  than  in  countries  where  this  work  is  taken  from 
him  and  given  to  the  horse  ? 

The  way  to  understand  it  is  of  course  to  consider  the 
ninety  and  nine  laborers  who  are  not  displaced  by  the 
horse  or  new  machine.  On  them  the  effect  is  simply  that 
of  supplying  them  some  article  they  want  on  easier  terms. 
This  at  once  advances  their  comfort,  and  is  followed  by  a 
sharpened  demand  for  the  article.  Where  this  results  in 
increasing  the  production  of  it  until  the  amount  of  labor 
needed  becomes  the  same  as  before,  there  the  gain  is 
unmixed  ;  but  there  is  found  to  be  more  than  enough 
gain  to  balance  all  losses  in  every  case.  As  has  often  been 
pointed  out,  all  the  capital  saved  by  the  rich  becomes  a 
new  demand  for  labor,  since  the  saving  is  of  no  use  to 
them  until  spent  in  some  way  that  calls  labor  into  opera- 
tion. But  I  have  no  concern  to  lay  stress  on  these  or  any 
explanations  of  this  very  significant  fact  of  observation. 
Enough  that  the  united  testimony  of  experience  proves 
it  to  be  a  fact,  and  that  Protectionists  invariably,  when 
addressing  the  laboring  man,  speak  as  though  they  knew 
it  not,  and  as  though  the  crude  notions  that  have  been 
disproved  by  it  were  matters  of  course. 

TYPES    OF    PAUPER    LABOR. 

The  poor  dupe  of  protection,  who  is  taught  to  tremble 
in  terror  at  the  spectre  of  competition  with  scantily  paid, 
low-fed,  and  ill-sheltered  labor  in  foreign  countries,  would 
see  in  his  own  country,  if  he  but  looked,  American  men 
every  day  all  around  him  thrown  out  of  work,  of  a  kind 
well  within  their  power  to  perform,  but  which  is  given  to 


192         ECONOMIC  AND   INDUSTRIAL    DEIA'SIONS. 

laborers  worse  paid,  fed,  clothed,  and  housed  than  the 
most  degraded  among  the  working  people  of  Europe.  If 
they  are  outraged  by  seeing  their  own  labor  displaced  by 
pauper  labor,  such  an  outrage  they  suffer  every  hour. 
This  is  precisely  what  is  done  wherever  a  horse  is  put  in 
a  tread-mill  or  hitched  to  a  plow.  The  most  elementary 
acquaintance  with  countries  in  which  men  are  not  de- 
prived of  this  employment,  by  the  preference  of  their 
"  poor  relations,"  could  convince  him  that  they  are  no 
better,  but  far  worse  off  for  having  their  labor  so  "  en- 
couraged." Then,  if  he  were  able  to  put  two  ideas  to- 
gether, he  would  see  at  a  glance  that  the  "  encouragement " 
given  to  labor  by  the  protective  system  is,  as  far  as  it  goes, 
of  precisely  the  kind  that  is  so  lavishly  bestowed  in  the 
countries  mentioned;  that  if  the  "competition  of  cheaper 
labor"  were  going  to  be  an  injury  to  him  instead  of,  on 
the  whole,  a  great  benefit,  the  competition  of  beasts  must 
be  far  more  degrading  and  dangerous  than  that  of  foreign 
men  ;  and  that,  altogether,  his  fears  are  the  creation  of 
those  who  would  use  his  ignorance  for  their  own  advan- 
tage. I  might  go  on  to  speak  of  competition  with  dead 
machinery,  which  is  not  fed  at  all,  and  which  is  capable 
of  exerting  a  power  that  would  require  hundreds  of 
laborers  to  replace  it,  were  further  illustration  necessary. 
But  I  have  said  quite  enough  on  this  point.  Am  I  wrong 
in  thinking  that  facts  so  plain  as  these  would  be  acknowl- 
edged on  every  hand,  but  that  people  have  been  carefully 
taught  to  hate  their  brothers  across  the  water,  and  have 
not  been  taught  to  hate  the  horse  or  engine }  Love  is 
called  blind,  but  blinder  yet  is  hatred. 

"  INVASION  "    OF    OUR    MARKETS    BY    CHEAP    GOODS. 

No  very  extended  space  need  be  given  to  the  appre- 
hended irruption  of  cheap  goods  which  would  follow,  or 


PRICES    VS.    WAGES.  1 93 

which  it  is  said  would  follow,  letting  down  the  tariff  bars. 
We  are  taught  that  we  must  guard  against  a  flooding 
of  our  markets  with  them,  that  we  must  always  be  on  the 
alert  to  fight  an  enemy  which  it  is  in  some  quarters 
fashionable  to  call  a  "  raid  on  our  markets,"  and  so  on, 
any  lack  of  reality  in  the  evil  or  of  probability  in  its 
occurrence  being  compensated  by  luridity  and  fervor  in 
the  figurative  language  by  which  it  is  characterized.  Un- 
fortunately, there  is  not  very  much  of  that  flooding, 
etc.,  that  could  be  hoped  for,  as  a  matter  of  fact.  Indus- 
tries do  not  easily  change  their  direction,  and  when  we 
remember  that  each  new  import,  however  cheap,  must  be 
attended  with  the  production  of  something  that  we  pre- 
viously did  not  produce,  to  pay  for  it,  or  at  least  the  ex- 
portation of  something  for  which  we  previously  found  a  use 
at  home,  it  appears  that  we  have  to  reckon  on  a  change  in 
our  habits  of  life,  whose  full  effect  must  be  slow  in  making 
itself  felt.  But  however  this  may  be,  the  main  point  about 
any  such  irruption  is  that  it  would  be  a  good  and  not  an 
evil  to  the  mass  of  our  citizens,  and  formidable  to 
monopolists  only. 

If  cheap  goods  were  an  evil,  it  would  be  a  greater  evil 
to  have  goods  for  nothing ;  if  it  should  rain  cheap  goods 
from  the  skies  on  any  part  of  the  country,  we  ought 
to  leave  that  part,  fence  ourselves  out  from  it,  and  care- 
fully "  protect  "  our  inhabitants  from  the  curse  that 
blighted  it.  We  ought  even  to  reject  the  work  of  Nature 
in  saving  labor  for  us,  and  use  instead,  as  far  as  possible, 
only  appliances  created  by  human  labor.  A  brilliant 
French  economist  once  circulated  a  mock  petition  pray- 
ing that  the  legislative  authority  should  decree  the  shut- 
ting off  of  heaven's  sunlight  from  all  dwellings,  so  that  the 
makers  of  candles  might  be  encouraged,  and  with  them  a 
great  number  of  other  industrials,  named  in  ample  detail, 
13 


194        ECONOMIC  AND   INJ)USTRIAL    D/U.rS/ONS. 

whose  trade  would  be  increased  by  their  prosperity.  It 
is  difficult  to  see  why  his  position  was  not  an  impregnable 
one,  on  the  theory  that  an  invasion  of  unlimited  cheap 
foreign  goods  is  disastrous.  If  we  see  in  it  any  absurdity, 
we  should  remember  that  it  has  been  very  closely  imitated 
by  actual  legislation,  in  the  protective  interest.  During 
the  Middle  Ages  it  was  enacted  in  England — not  a  device 
is  possible  to  protection,  whose  folly  that  country  has  not 
proved  by  actual  trial — that  the  dead  should  be  buried  in 
woollen  shrouds,  to  encourage  the  manufacture  of  wool. 
And  in  these  very  days,  our  own  Congress  has  attached 
to  the  wretchedly  inadequate  bill,  which  it  felt  compelled 
to  throw  as  a  sop  to  the  growing  international-copyright 
sentiment,  the  condition  that  no  book  could  receive  any 
benefit  unless  printed  from  type  set  within  this  country. 
From  legislation  of  this  kind  to  such  as  would  shut  off 
sunlight  for  the  gain  it  would  bring  the  candle-makers,  is 
no  "  far  cry,"  certainly.  Only  those  have  the  right  to  find 
wisdom  in  such  measures  who  continue  the  use  of  spin- 
ning-wheels in  their  houses  to  encourage  the  labor  of  the 
family. 

DANGER     OF     INCREASED     PRICES,      WITH     FOREIGN     CONTROL 
OF    OUR    MARKETS. 

I  have  not  forgotten  the  difference  that  many  good 
people  think  they  see  between  shutting  off  sunlight  and 
shutting  off  foreign-made  goods.  In  their  view,  when  a 
foreigner  supplies  things  cheaply  it  is  always  as  a  prelude 
to  running  up  the  prices  higher  than  ever,  as  soon  as 
he  gets  control  of  the  market.  It  is  a  sufificient  answer 
to  this  that  the  danger  exists  in  their  imagination  alone. 
It  has  its  origin  in  conjecture,  rather  than  experience  ; 
and  the  only  mite  of  experience  ever  brought  to  support 


PRICES    VS.    WAGES.  IQS 

that  vast  superstructure  of  conjecture,  the  great  revival 
of  our  import  trade  in  1815,  came  to  us  under  circum- 
stances too  exceptional  to  furnish  any  guide  for  the 
future.  I  do  not  say  that  the  manufacturers  of  Great 
Britain,  in  sending  us  the  large  quantity  of  their  goods 
that  they  then  sent  us,  were  combined  in  any  such  con- 
spiracy as  this  view  supposes.  By  all  the  light  I  can 
gather,  such  a  hypothesis  is  absurd.  But  I  do  say,  un- 
hesitatingly, that,  even  supposing  they  were  trying  any 
such  experiment  at  that  remote  date,  the  results  from  it 
— leaving  out  of  view  anything  that  we  may  ourselves 
have  done  by  retaliatory  legislation — were  not  such  as  to 
encourage  them  to  repeat  it.  At  present  no  intelligent 
business  man  has  any  real  belief— whatever  he  may  pre- 
tend— that  such  an  experiment  is  likely  to  be  made, 
or  could  be  made.  So  low  are  ocean  freights  that  it 
would  not  be  possible,  but  for  tariff  duties,  to  maintain 
any  considerable  difference  in  price  between  goods  sold 
in  Europe  and  goods  sold  here ;  hence  the  same  changes 
of  prices — first  down,  then  up — would  have  to  be  applied 
at  the  same  time  at  home  and  everywhere  else.  No 
combination  can  charge  a  price  for  goods,  higher  than  the 
lowest  that  will  bring  a  reasonable  profit,  except  on 
condition  of  keeping  a  close  watch  out  for  competitors. 
Those  who  realize  how  ticklish  a  business  holding  up 
prices  by  combinations  is,  here  in  a  country  where  the 
laws  give  it  every  help  by  cutting  off  the  larger  part 
of  the  world  from  the  competition,  easily  see  that  the 
difficulties  of  the  task  must  multiply  until  insuperable 
when  there  is  the  whole  world  to  be  watched.  It  requires 
only  one  little  item  of  information,  that  combinations  are 
far  easier  in  a  country  where  there  are  special  laws  en- 
couraging them  than  in  the  world  outside  where  no  such 
legal  favor  is  to  be  had,  to  understand  why  this  apprehen- 


196        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

sion  that  prices  can  be  made  so  promptly  and  submissively 
to  obey  a  foreign  ring  of  producers  is  not  one  that  is  held 
by  our  better-informed  manufacturers  themselves.  They 
are  sore  afraid  of  something,  it  is  true,  but  that  something 
is  that  prices  will  come  down  and  stay  down.  When 
they  start  a  cry  of  alarm  against  conjectural  combinations 
of  foreign  producers  for  our  oppression,  it  is  on  the  same 
principle  that  the  thief  shouts  "  Stop  thief,"  to  mislead 
those  who  might  attack  the  real  present  combination  at 
home.  Their  reliance  is  on  people's  ignorance  of  the  laws 
of  trade,  under  which  advantages  and  disadvantages  in 
the  market  are  necessarily  balanced,  and  in  the  narrow 
fear  of  foreigners,  with  which  ignorance  of  all  kinds 
naturally  associates. 

To  excuse  those  legislators  who,  in  imposing  a  duty  on 
any  competing  foreign-made  fabric,  profess  to  fear  that 
without  such  a  precaution  the  foreigners  will  first  get 
"  control  of  the  market  "  and  then  run  up  the  price 
beyond  what  is  now  paid  by  consumers  in  this  country, 
they  ought  to  be  able  to  add  that  in  so  doing  tJic  foreigners 
zvill  take  every  capitalist  in  the  eountry  unawares.  Sup- 
pose, for  argument's  sake,  that  some  one  of  our  own 
moneyed  men  is  able  to  anticipate  the  game  through 
which  the  legislator  says  he  sees  so  clearly  ;  what  power 
is  to  prevent  him  from  blocking  it?  No  one  pretends, 
remember,  that  the  foreigner  is  going  to  undertake  his 
game  out  of  pure  spite,  or  for  any  other  reason  than 
because  he  sees  profit  in  it — sees  that  enough  can  be 
made  on  future  sales  at  the  advanced  price  to  reimburse 
him  for  present  sales  at  a  sacrifice.  But  if  he  is  going  to 
be  able  to  see  that,  what  is  going  to  prevent  investors 
within  our  borders  from  seeing  it  also,  and  participating 
in  any  profit  that  is  to  come  from  the  enterprise?  If  the 
legislators  who  profess  such  a  fear  really  entertain  it,  they 


PRICES    VS.   WAGES.  1 97 

are  ascribing  to  our  lynx-eyed  capitalists  a  blindness  with 
which  nobody  else  in  the  world  will  credit  them.  If  they 
do  not  entertain  it,  they  are  ascribing  to  our  citizens  no 
moderate  degree  of  blindness  in  supposing  them  capable 
of  it. 

Unhappily,  however,  the  ascription  of  blindness  to  the 
rulers  of  this  many-headed  republic  is  not  the  affront 
that  we  would  wish  to  regard  it — that  it  would  really  be 
if  they  were  as  enlightened  on  national  as  on  domestic 
economy.  All  the  appeals  and  assumptions  and  argu- 
ments which  it  has  been  the  object  of  this  chapter  to  ex- 
pose and  answer,  agree  in  supposing  a  blindness  to  the 
teachings  of  common-sense  and  of  our  national  history  on 
the  part  of  those  to  whom  they  are  addressed.  There  is 
a  negative  blindness :  a  mere  absence  of  light,  to  which 
the  eye  is  nevertheless  open,  and  by  which  it  is  ready  at 
any  time  to  be  penetrated  and  illumined.  There  is  also  a 
positive  blindness,  harder  far  to  cure  :  a  closing  of  the  eye 
against  light,  by  the  power  of  fear  or  hatred  or  prejudice 
or  avarice.  Progress  in  enlightenment  can  at  best  be  slow, 
where  this  exists ;  and  the  evidence  that  so  much  success 
has  already  been  attained,  in  spite  of  it,  in  spreading 
throughout  the  country  an  understanding  of  the  truths  of 
political  economy,  could  not  be  otherwise  than  gratifying 
to  the  public-spirited  citizen. 


CHAPTER  VII. 


THE   HOME    MARKET. 


Since  imports  are  paid  for  by  exports,  product  for 
product,  except  where  the  product  is  a  payment  for  serv- 
ice rendered — as  in  ocean  transportation — or  for  interest 
on  a  loan,  it  is  as  plain  as  any  truth  can  be  that  no  pro- 
tective system  could  benefit  all  productive  industries  in 
the  same  way.  If  it  is  needed  to  shield  some  of  them 
from  competition  by  keeping  imported  goods  out  of  the 
market,  this  need  must  arise  from  the  fact  that,  if  un- 
protected, those  goods  would  be  purchased  by  sending 
abroad  others  ;  and  is  of  itself  a  conclusive  proof  that  the 
other  goods,  whatever  such  goods  may  be,  have  no  use 
for  a  protecting  shield.  For  example,  the  very  fact  that 
we  have  to  devise  protective  laws  to  prevent  hardware 
and  woollens  from  coming  into  the  country,  taken  in  con- 
nection with  the  fact  that  they  could  only  come  in  because 
an  increased  quantity  of  something  else — and  what  so 
likely  as  wheat  ? — is  sent  out,  is  proof  conclusive  that  the 
wheat  is  not  in  need  of  protection,  and  that  the  twenty- 
five  cents  a  bushel  upon  it  is  either  utterly  purposeless,  or 
imposed  with  intent  to  beguile  somebody.  But  Protection 
does  not  depend  upon  beguiling  its  victims  with  anything 
so  transparent  as  twenty-five  cents  a  bushel  on  a  product 
of  which  we  export  a  large  excess.  It  has  another  arrow 
in  its  quiver,  with  which  it  does  far  more  deadly  execu- 
tion.    At  those  for  whom  it  can  gain  nothing  immedi- 

198 


THE  HOME   MARfCET.  1 99 

ately,  and  who  might  on  that  account  be  disposed  to  throw 
it  off  as  a  needless  burden,  it  is  always  ready  to  fire  the 
Home  Market. 

The  system  that  provides  a  Home  Market  undertakes 
to  crown  us  with  three  blessings  at  once ;  "  one  sure,  if 
all  the  others  fail."  First,  it  keeps  out  our  competitors. 
Second,  it  brings  us  customers.  Third,  it  makes  custom- 
ers of  those  who  would  otherwise  be  competitors,  and 
prevents  those  who  now  buy  of  us  from  becoming  rivals 
in  the  markets  where  we  must  sell.  Is  not  that  lovely, 
entirely  }  What  could  be  more  desirable  than  a  system 
which  does  these  three  things  for  us  ?  And  yet,  if  we  but 
trust  the  word  of  its  advocates,  the  beatific  system  of 
protection  does  them  all.  It  is  only  when  we  become  ex- 
acting, and  require  something  more  in  the  way  of  testi- 
mony than  the  unsupported  assertion  of  those  advocates, 
that  a  doubt  arises.  And  I  may  add,  the  more  exacting 
we  are,  and  the  more  testimony  we  examine,  the  less  sub- 
stantial will  these  three  claims  appear ;  the  less  service  for 
the  system  will  they  be  capable  of  doing.  To  establish 
this  fact,  is  the  object  of  the  present  chapter. 

Illustrations  of  the  points  here  raised  or  controverted 
will  naturally  be  taken  from  the  farmer's  calling ;  for  to 
that  is  the  Home  Market  most  applied.  There  are 
other  industries  whose  products  can  be  exported,  to  be 
sure  ;  but  they  differ  essentially  from  farming  by  having 
their  control  in  fewer  hands.  No  combination  of  farmers 
to  set  prices,  except  for  a  short  time,  in  a  single  market, 
is  practicable  ;  to  them,  therefore,  the  privilege  enjoyed 
by  other  industrials  of  exacting  a  higher  price  on  articles 
sold  within  the  country,  than  they  can  obtain  from  for- 
eigners for  the  same  articles,  is  unattainable.  It  follows, 
then,  by  the  strictest  logic,  from  the  uncontested  principle 
that  protection  must  be  credited  with  bringing  some  im- 


200      rro.vo^rir  and  /NnrsTA'/Ai.  D/j.irsioNs. 

portant  benefit  to  everybody  whose  votes  are  necessary  to 
sustain  it,  that  the  Home  Market  must  be  the  particular 
sort  of  benefit  it  brings  the  farmers. 

IN  WHAT   WAY   FOREIGN  COMPETITORS  ARE  KEPT  OUT. 

High  importance  has  been  claimed  for  the  work  of  the 
system  in  repressing  competition  in  agricultural  products. 
Farmers  are  themselves  "  protected."  How  thoroughly 
protected  is  shown  in  our  latest  tariff  law,  which  not  only 
continues  on  every  product  of  the  farm  the  liberal  rate  of 
tax  allowed  by  previous  laws,  but  on  most  products  in- 
creases it ;  is  not  that  all  that  farmers  could  ask  ?  As  the 
most  important  of  these  products  belong  either  to  the 
class  of  hay,  requiring  comparatively  few  miles  of  trans- 
portation to  swallow  up  their  entire  value  to  the  producer, 
or  to  that  of  cotton,  meats,  and  wheat,  largely  exported 
and  therefore  safe  in  our  markets  without  a  duty,  only  the 
most  zealous  of  Protectionists  undertake  to  mislead  the 
farmer  with  regard  to  the  duties  upon  these — unless  he 
lives  along  the  Canadian  border.  The  work  of  protection 
has  to  be  cried  up  with  redoubled  emphasis  on  products 
less  important  ;  but  since  the  liberty  is  allowed,  and 
always  used,  of  proclaiming  in  trumpet-tones  the  tribute 
received  by  the  farmer  who  raises  these  products,  when 
he  is  present,  and  keeping  silent  as  the  grave  about  any 
such  tribute  when  none  is  present  but  people  who  help  to 
pay  it,  a  good  many  votes,  first  and  last,  are  scraped  into 
the  party  fob  in  that  way. 

Wool  is  chief  among  these  lesser  articles.  The  tariff 
increases  the  price  of  wool  to  the  grower,  by  an  amount 
which  the  wearer  of  woollen  clothes,  slumberer  under 
woollen  blankets,  treader  on  woollen  carpets,  has  to  pay. 
For  proof  of  this  proposition,  read  that  passage  from  any 


THE  HOME  MARKET.  20I 

speech  advocating  it,  in  which  the  "  compensatory  " 
duties  on  woollen  fabrics  are  explained  and  defended. 
The  cost  to  the  consumer  is  in  this  case  a  good  deal  more 
than  the  producer  receives ;  but  pass  over  that  point  for 
the  present.  Every  farmer  whose  clip  of  wool  is  not 
larger  than  the  whole  consumption  of  his  family,  in  the 
ways  above  mentioned  and  in  others,  must  gain  less  than 
he  loses  by  this  tax  alone.  Of  course  when  he  considers 
the  effect  of  the  whole  system  of  tariff  taxation,  in  raising 
the  price  of  his  stoves,  tools,  railway-freights,  and  what 
not,  he  will  find  that  he  must  own  a  very  large  flock 
indeed  to  make  the  account  balance.  That  is  to  say,  only 
the  rich  ones  can  possibly  score  a  net  gain,  the  poor  ones 
are  made  poorer — truly  a  beautiful  example  of  republican 
equality  and  fraternity  !  I  need  not  dwell  longer  on  this 
theme,  for  the  farmers  most  interested  are  beginning  to 
see  the  facts  as  plainly  as  I  do.  The  wool-tariff  sensation 
is  proving  a  failure,  as  I  have  already  pointed  out,  in  the 
one  and  only  object  of  its  being — to  keep  wool-growing 
States  "  solid  for  the  party  "  ;  and  yet  its  contrivers  dare 
not  drop  it,  and  fall  in  at  the  tail  of  the  Cleveland  proces- 
sion, for  that  would  be  confessing  the  incapacity  of  all 
the  experienced  statesmen  whom  they  honor,  to  take  a 
view  so  true,  so  broad,  so  patriotic,  as  one  chosen,  early 
and  easily,  by  the  "  Buffalo  sheriff  "  whom  they  scorn. 
The  creature  they  have  caught  can  be  neither  held  nor 
released. 

Flax  is  naturally  associated  with  wool.  I  have  heard 
of  great  exploits  in  the  culture  of  this  plant,  that  were  to 
be  accomplished  when  it  had  adequate  protection.  If 
flax  would  not  be  raised  here  under  trade  absolutely  free, 
the  reason  must  be  because  a  better  and  more  profitable 
expenditure  of  our  energy,  a  way  by  which  we  get  more 
linen,  is  found  in  producing  something  else  and  sending  it 


202         F.CONOMIC  AND  INDUSTRIAL   DELUSIONS. 

abroad  in  exchange.  I  grant  that  legislation  could  make 
the  alternative  plan  less  profitable  by  such  taxation  as 
would  prevent  the  producer  from  getting  by  it  so  much 
linen  for  the  same  work,  just  as  a  horse  in  a  pasture-field 
could  be  made  easier  to  catch  by  crippling  him  a  little. 
Is  protective  taxation  anything  better  than  such  another 
crippling  of  our  own  resources  ? 

Then  there  are  onions.  Onions  may  be  thought  unim- 
portant, perhaps — but  hear  and  heed.  One  of  the  recent 
master-strokes  of  the  New  York  Trihine  was  to  send  out 
inquiries  to  several  hundred  farmers — searching  inquiries, 
calculated  to  evoke  the  most  candid  of  responses — as  to 
the  working  of  the  tariff  system  in  their  behalf.  I  say 
unhesitatingly,  sent  them  out ;  far  be  it  from  me  to  insin- 
uate that  it  sent  them  from  one  editorial  room  to  another, 
on  no  better  ground  than  merely  that  such  of  the  answers 
as  found  their  way  to  the  light  looked  as  though  they  had 
been  so  obtained.  The  responses  from  this  battalion  of 
horny-handed  followers  of  the  plow  (names  and  ad- 
dresses not  furnished)  were  duly  submitted  to  a  com- 
mittee of  staunch  Protectionists- — Warner  Miller,  I  believe, 
was  one, — and  when  reported  on  showed  a  unanimous 
conviction  of  the  loveliness  of  tariff  duties  for  the  country 
generally  and  their  own  calling  particularly.  This  piece 
of  news  our  good  Tribune  (which  would  have  been  ready 
to  announce  a  contrary  state  of  things,  we  know  with  what 
faithful  accuracy  !)  must  have  found  welcome  indeed.  But 
there  are  spots  even  on  the  glorious  sun,  and  this  chorus 
of  cultivating  countrymen  discovered  one.  Just  one  thing 
was  needed  to  make  our  adorable  tariff  a  thought  more 
perfect,  and  that  thing  was  a  little  higher  protection  on 
onions.  Our  own  heedless  eyes  may  have  overlooked  the 
momentous  fact  that  there  are  onions,  but  there  was  an 
eye  within  whose  sweeping  \nsion   no   slighted   vegetable 


THE  HOME  MARtCET.  203 

could  rear  its  signal  of  distress  in  vain.  McKinley  saw, 
and  acted.  Imported  onions  must  now  pay  forty  cents  a 
bushel,  six  or  eight  times  the  former  duty.  And  yet,  for 
some  reason,  the  farmers  have  not  been  flocking  under 
McKinley's  banner  quite  as  they  should  have  flocked.  Is 
the  race  irredeemably  ungrateful  ?  Or  can  it  be  that  their 
happiness  was  not  after  all  so  essentially  bound  up  with 
onions  as  every  reader  of  the  Tribune  believed  ? 

I  have  known  a  few  worthy  farmers  who  were  thrown 
into  spasms  of  terror  by  the  thought  of  free  potatoes.  It 
seems  that  while  these  edibles  were  under  a  protection  of 
fifteen  cents  a  bushel,  our  imports  of  them  nevertheless, 
oftener  than  not,  exceeded  our  exports.  The  statistics  of 
this  subject  are  easily  accessible  in  government  publica- 
tions. During  an  average  of  four  years  out  of  ten,  im- 
ports and  exports  are  about  equal  and  both  small,  neither 
rising  so  high  as  one  half  per  cent,  of  the  year's  crop, 
which  is  then  a  full  one.  For  about  four  more  years  out 
of  the  ten  the  yield  falls  off,  being  then  from  75  to  90 
per  cent,  of  a  crop  ;  importations  are  then  in  excess,  by 
an  amount  equal  to  about  one  per  cent.,  or  in  rare  cases 
as  high  as  two  per  cent,  of  our  consumption.  Two  seasons 
out  of  ten,  perhaps,  are  peculiarly  bad  for  potatoes ;  in 
1 88 1,  for  instance,  there  was  barely  60  per  cent,  of  a  full 
yield,  and  not  quite  70  per  cent,  in  1887.  Following 
these  reverses,  importations  rose  to  8  per  cent,  and  6  per 
cent,  respectively  of  the  crops  raised,  or  something  above 
4  per  cent,  of  a  full  yield.  The  tariff  of  1890  raised  the 
duty  to  25  per  cent.  ;  but  that  also  was  an  unfavorable 
year  for  potatoes,  so  that  importations,  far  from  ceasing, 
at  once  greatly  increased  under  the  new  rate.  But  pota- 
toes, as  we  know,  became  scarcer  and  dearer.  The  Agri- 
cultural Department's  figures  go  no  farther  than  1888, 
unfortunately.     But  the  facts  appear  sufficient  to  justify 


204        ECONOMIC  AA^D  /AW[rsTA'/AL    DELUSIONS. 

one  or  two  general  statements.  We  export  about  as  much 
as  we  import  during  the  full  years,  so  that  the  duty  is 
then  without  effect  on  the  price.  There  are  no  importa- 
tions of  potatoes  worth  speaking  of,  except  when  there  is 
a  scarcity  with  us,  and  the  duty  then  protects  by  obstruct- 
ing the  relief  of  this  scarcity.  So  plain  is  this  from  the 
figures,  that  the  amount  of  importation  during  a  fiscal 
year  can  be  calculated  pretty  closely  when  we  know  by 
how  much  the  crop  fell  short  of  the  full  crop,  being  equal 
under  the  old  duty  to  something  like  one  twelfth  of  the 
deficiency.  The  effect  of  taking  off  the  duty  would 
probably  be  to  make  this  fraction  greater  than  one  twelfth  ; 
so  that  a  scarcity  of  the  potato  crop  would  then  be  less 
distressing  to  the  public.  It  is  worth  while  to  remember 
that  the  importations  for  full  years  are  chiefly  of  a  prod- 
uct that  is  strictly  "  non-competing  "  ;  new  potatoes  from 
Bermuda,  at  a  season  when  only  the  last  year's  yield  is  to 
be  bought  in  this  country.  But  the  important  points  to 
bear  in  mind  are  that  the  duty  on  potatoes,  as  a  general 
rule,  only  helps  the  potato-raisers  when  few  of  them  have 
any  to  sell,  and  they,  as  a  class,  are  consequently  in  a  po- 
sition to  get  little  help  from  it ;  also,  that  the  only  way  it 
can  help  them  is  by  maintaining  scarcity  in  the  country, 
by  depriving  their  fellow-citizens  of  a  due  share  of  food. 
I  can  think  of  few  ways  of  making  money  that  are  meaner 
and  more  disgraceful  than  through  a  conspiracy  to  cut 
down  the  supply  of  food  in  the  land,  especially  when  I 
remember  w^io  it  is  that  suffers  by  this — on  what  class  the 
Irish  potato-famines  have  fallen  most  heavily — and  that 
no  kind  of  food-supply  has  more  importance  to  the  very 
poor  than  potatoes.  Any  gain  that  comes  from  it  is  won 
by  making  the  hungry  hungrier.  But  a  device  that,  like 
this  protective  machine,  half  the  time  brings  the  farmer 
exactly  nothing  in  return  for  all  it  costs  him,  and  when  it 


THE  HOME   AfARKET.  20$ 

raises  the  price  of  his  product  for  him  contrives  to  do  so 
just  when  he  has  none  to  sell — may  even,  as  has  sometimes 
happened,  be  himself  a  buyer — is,  in  the  words  of  the 
French  philosopher,  "  worse  than  a  crime  ;  it  is  a  blunder." 

SCARCITY,    SURPLUS,  AND    PRICES    OF    STAPLES. 

In  the  reports  of  the  Agricultural  Department,  where 
the  facts  with  regard  to  the  production  of  our  principal 
staples  are  to  be  sought,  the  "  total  production  "  and  the 
"  total  value  of  crop  "  occupy  adjoining  columns.  One  of 
the  most  interesting  observations  to  be  made,  in  compar- 
ing the  two  sets  of  figures,  is  that  they  show  no  regular 
tendency  to  vary  in  the  same  direction  ;  when  the  yield 
increases,  the  total  value  of  the  crop  not  only  does  not 
increase,  as  a  rule,  but  is  very  apt  to  fall  off — the  dimin- 
ished rate  per  bushel  having  more  effect  to  depreciate 
than  the  larger  crop  to  advance  the  value.  The  corn  crop 
of  1889,  for  example,  is  set  down  as  less  valuable  than 
any  since  1879,  ^"^  Y^^  ^t  was  the  largest  ever  raised  in 
the  country.  The  price  of  wheat  is  much  less  sensitive, 
so  that  in  that  staple  we  are  much  less  likely  to  see 
greatly  increased  yields  accompanied  by  reduced  total 
values  ;  and  yet  we  can  note  such  facts  as  that  the  yield 
of  1889  was  one  of  our  largest — being  18  percent,  advance 
on  the  year  preceding, — while  its  total  value  was  1 1  per 
cent.  less.  We  can  say,  in  a  general  way,  that  although 
the  country  produces  about  double  the  corn,  and  double 
the  wheat  that  it  produced  twenty  years  ago,  the 
total  value  of  the  corn  crop  is  the  same  that  it  was  then, 
and  that  of  the  wheat  crop  has  increased  by  less  than  30 
per  cent.  If  the  earlier  figures  give,  as  is  altogether  proba- 
ble, values  in  8o-cent  dollars,  we  should  acknowledge  an 
increase  of  25  per  cent,  in  the  value  of  the  corn  crop,  and 


2o6 


ECOXOMIC  AND  INDUSTRlAf.    DEL  US/0  ATS. 


60  per  cent,   in  that  of  wheat  ;  showing  a   falling  off   in 
vakic  per  bushel,  even  on  gold  prices. 

The  decreased  value  accompanying  increased  yield, 
which  is  shown  in  some  degree  by  other  staples,  is  espe- 
cially notable  in  potatoes.     The  coincidence  is  so  remark- 


..L 

Per  Unit  of  Population. 

a 
> 

Population — Mill 
ion  Inhabitants. 

1 
"o 

u 

a  a 

i 

•0  — 

0 

H 

U 

X  3 

Ij2 

a-| 

1 

V  ^ 
uP3 
X 

V   C 

1867 

36.6     2 

44 

2.67 



_ 







1868 

37-4     2 

25 

—0.19  D 

2.84 

+  0.17 



— 

— 

— 

1869 

38.2     I 

88 

-0.37  D 

3-51 

+  0.67 



— 

— 

— 

1870 

39.1     2 

12 

+  0.24  D 

2.94 

-0.57 



— 

— 

— 

187I 

40.1     I 

79 

—0.33  D 

3.00 

+  0.06 



— 

— 



1872 

41.2     I 

65 

—0.14  A 

2.75 

—  0.25 



— 

— 

— 

1873 

42.3     1 

77 

4-0.12  D 

2-51 

—  0.24 



— 

— 

— 

1874 

43-4    I 

65 

—0.12  A 

2.44 

—  0.07 



— 

— 

— 

1875 

44.6    I 

46 

—0.19  D 

3-74 

-fl.30 



— 

— 

— 

1876 

45-8    I 

83 

+  0.37  D 

2.72 

—  1.02 

0.013 

0.070 

+  0.057 

+  0.068 

1877 

47.0    I 

62 

—0.21  D 

3.62 

+  0.90 

0.016 

O.OII 

—  0.005 

—0.007 

1878 

48.3    r 

51 

—0.1 1  A 

2.57 

-1.05 

0.013 

0.054 

-f  0.041 

+  0.080 

1879 

49-5    I 

60 

4-0.09  A 

3-67 

+  I.IO 

0.014 

0.014 

0.000 

—0.012 

1880 

50.8    I 

60 

0.00 

3-30 

-0.37 

0.013 

0.043 

+  0. 030 

+  0.019 

1881 

52.1    I 

91 

+  0.31  D 

2.09 

—  1.21 

0.008 

0.169 

+  O.161 

+  0.120 

1882 

53-4    I 

78 

—  0.13  D 

3.20 

-t-I.II 

0.008 

0.044 

+  0.036 

+  0.028 

1883 

54-6    I 

61 

-0.17  D 

3.81 

-f  0.61 

O.OIO 

0.008 

—  0.002 

—0.023 

1S84 

55-9    I 

35 

—0.26  A 

3.41 

—  0.40 

0.007 

0.012 

+  0.005 

+  0.010 

1885 

57-1    I 

37 

-f  0.02  D 

3.06 

-0.35 

0.009 

0.034 

+  0.025 

+  0.039 

1886 

58.4    I 

34 

—0.03  A 

2.88 

—  0.18 

0.007 

0.024 

+  0.017 

+0.054 

1887 

59.6    I 

54 

-f  0.20  D 

2.25 

—  0.63 

0.007 

0.139 

+  0.132 

+  0.107 

1888 

60.8    I 

34 

—0.20  D 

3-33 

-H.O8 

0.008 

0.015 

+  0.007 

+  0.017 

able  that  it  has  seemed  worth  while  to  prepare  a  table 
to  show  it  in  some  detail.  I  have  added  also  some 
account  of  the  importations  during  the  years  for  which  I 
have  collected  the  figures.  The  second  column  gives  the 
population,  approximately,  as  calculated   for  December; 


THE  HOME  MARKET.  20/ 

in  the  tables  accompanying  Chapter  III.  it  was  given  for 
June.  The  value  of  the  potato  crop,  and  the  total  annual 
product,  are  given  on  a  per  capita  basis  in  the  third 
and  fifth  columns ;  so  many  dollars  and  so  many  bushels 
to  each  inhabitant.  The  fourth  and  sixth  columns  give 
differences  from  the  year  preceding ;  increases  being  marked 
-f-  and  decreases  — .  Those  for  the  value  of  the  crop 
are  followed  by  A  or  D,  according  as  their  sign  agrees  or 
disagrees  with  that  of  the  corresponding  product-differ- 
ences. The  seventh  and  eighth  columns  show  the  frac- 
tion of  a  bushel  exported  and  imported  for  each  inhabitant. 
As  the  figures  apply  to  "  fiscal  years  " — latter  half  of  one 
year  and  former  half  of  the  next  following — and  as  it  is 
evidently  desirable  to  place  opposite  each  annual  yield  its 
effect  on  the  amount  of  imports,  I  have  here  denoted  each 
fiscal  year  by  its  beginning  rather  than  its  close ;  so  that 
the  importation  here  set  down  opposite  i88i  will  be  found 
in  the  Report  as  for  the  "fiscal  year  1882."  In  the  last 
column,  to  compare  with  the  excess  of  importations  shown 
in  the  ninth,  I  have  given  one  twelfth  of  the  deficiency, 
the  "full  crop"  of  potatoes  being  for  this  purpose  esti- 
mated at  3.53  bushels  per  head.  For  example:  in  1876, 
the  crop  was  2.72  bushels  per  head,  or  0.81  short.  One 
twelfth  of  this  deficiency,  or  0.068,  is  the  amount  set 
down.  The  resemblance  between  the  last  column  and 
the  one  preceding  it  is  sufficiently  close  to  be  quite 
suggestive. 

The  letters  added  to  the  fourth  column  give  us  six 
agreements  and  fourteen  disagreements,  and  thus  indicate 
that,  fourteen  times  out  of  twenty,  an  increased  crop  is  fol- 
lowed by  a  diminished  total  value,  and  vice  versa.  The 
amount  of  this  change  of  total  value  is  approximately  16 
cents  per  capita  for  every  bushel  per  capita  by  which  the 
year's  crop  is  larger  or  smaller.     In  another  calculation  I 


2o8         ECONOMIC  AND   INDUSTRIAT.    nFJJ'SJON S. 

noted  the  percentage  by  which  product  and  value  respec- 
tively increased  or  lessened,  in  proceeding  from  year  to 
year  :  and  I  thus  found  that  for  every  one  per  cent,  by  which 
the  crop  varied,  the  total  value  varied  about  three  tenths 
of  one  per  cent,  in  the  opposite  direction.  The  price  of  a 
bushel  therefore  varied  1.3  per  cent.  Taking  the  increases 
and  decreases  as  given  directly  by  the  official  tables,  two 
more  changes  between  total  values,  i879-'8oand  i885-'86, 
appeared  as  "disagreements,"  thus  making  sixteen  out  of 
twenty-one.  It  was  preferred,  however,  in  this  as  in  other 
statistical  calculations  that  have  preceded  it,  to  allow  for 
the  growth  of  the  country  in  population  before  deducing 
anything  from  the  figures. 

PRICES    AS    INFLUENCED    BY    THE     EXCLUSIVE     HOME     MARKET. 

What  is  the  use  of  the  inquiry  that  has  just  been  made, 
and  what  bearing  has  it  on  the  question  of  Home  Mar- 
kets? In  the  first  place,  it  is  well  to  have  practical  proof, 
clearly  before  the  eye,  of  a  principle  which  has  received 
considerable  attention  from  economists :  that  the  price  of 
a  necessary  article,  in  a  limited  market,  not  only  increases 
as  the  supply  diminishes,  but  increases  more  rapidly  than 
the  supply  diminishes,  so  that  diminution  of  the  supply 
increases  its  total  value  in  exchange.  This  principle  is 
always  used  in  practice  by  those  who  are  able  to  form 
"  Trusts  "  to  control  production.  The  advantage  to  them 
of  limiting  the  product,  and  so  gaining  a  larger  return 
from  less  effort,  is  sufficiently  obvious  to  make  that  their 
first  endeavor ;  and  it  is  quite  as  obvious  that  everything 
that  they  thus  gain  is  at  the  cost  of  the  consumers,  who 
have  to  pay  higher  for  a  smaller  quantity.  Is  there  not  a 
suggestion  in  this  of  the  expediency,  from  the  consumer's 
point  of  view,  of  such  legislation  as  will  make  less  prac- 


THE  HOME  MARKET.  209 

ticable  the  formation  of  these  Trusts,  and  of  repealing  the 
legislation  which  promotes  it  ?  Is  there  not  also  an  ex- 
planation of  the  fervid  intensity  of  those  who  do  not  take 
the  consumer's  point  of  view,  in  advocacy  of  acts  which  so 
well  serve  their  purpose,  and  their  readiness  "  to  make 
the  worse  appear  the  better  reason  "  in  enlisting  other 
advocates  ? 

In  the  second  place,  these  statistics  give  a  forcible  indi- 
cation, to  one  who  reflects  upon  them,  of  the  necessity  to 
him  who  produces  a  surplus,  of  an  access  to  something 
beyond  the  home  market.  When  the  market  is  con- 
tracted, a  product  which  is  ten  per  cent,  in  excess  of  the 
ordinary  figure  will  bring  down  prices  decidedly  more 
than  ten  per  cent.  When  the  market  is  enlarged,  the  sur- 
plus has  a  chance  to  flow  off  elsewhere — the  stream  can- 
not rise  so  high  when  there  is  no  barrier.  This  is  a  fact 
which  is  now  so  well  understood  that  even  a  Republican 
Administration  dares  not  withstand  it.  But  while  the 
device  of  this  Administration  is  to  silence  the  over-pro- 
ducer by  pretending  to  find  him  markets  through  treaties 
with  countries  which  furnish  little  or  no  demand  for  his 
products,  there  are  others  who  regard  a  fact  which  it  stu- 
diously neglects,  that  no  increased  outflow  of  goods  is  to 
be  had  without  arranging  in  some  way  for  an  increased 
inflow — that  the  laws  which  bar  the  one  bar  the  other 
equally.  I  need  not  enlarge  upon  a  point  to  which  I 
have  already  given  so  much  space. 

The  reason  why  there  was  so  much  difference  in  the 
sensitiveness  shown  by  the  values  of  the  three  staples  we 
have  considered,  to  the  increased  or  diminished  yield,  is 
not  far  to  seek.  Of  potatoes,  as  already  shown,  our  ex- 
portations  are  small,  and  usually  exceeded  by  our  impor- 
tations. Of'corn,  we  import  practically  none,  and  export 
about  three  per  cent,  of  the  crop.  Of  wheat  the  imports 
14 


2IO         F.COMOMrC  AXD    TXPrS'/'RlAI.    DF.LVSIONS. 

are  also  inconsiderable,  while  the  exports  (including  flour) 
amount  to  twenty-five  per  cent.,  more  or  less.  The  larger 
the  part  of  a  crop  which  finds  a  foreign  market,  the  less 
its  value  fluctuates.  We  find  greater  constancy  of  price 
according  as  we  approach  free-trade  conditions. 

ARE    LAWS    NEEDED    TO    SEND    THE    PRODUCER    TO    HIS    BEST 
MARKET  ? 

In  the  typical  home-market  plea,  it  is  always  elabo- 
rately demonstrated  to  the  farmer  that  the  expense  of 
transporting  his  products  is  a  tax  on  their  value  of  which 
he  ought  to  be  freed  if  possible,  and  that  every  additional 
sale  he  can  make  of  them  to  neighbors  is  therefore  so 
much  clear  gain.  Here,  as  in  a  good  many  other  parts  of 
the  protectionist  case,  we  have  a  proposition  that  is  sub- 
stantially true  when  other  things  are  equal,  assumed  as 
true  when  other  things  are  very  far  from  equal.  It  is  not 
denied  that  the  producer  does  better  for  himself  by  selling 
in  a  market  near  by  than  in  one  at  a  remote  distance, 
when  there  is  no  other  difference  between  the  two.  But 
that  case  is  exactly  the  one  for  which  no  legislation  is 
necessary.  The  Long  Island  truck-farmer  does  not  need 
legal  interference  to  prevent  him  from  taking  his  supplies 
past  New  York  City  to  Newark  or  Trenton  for  market. 
But  if  our  Solons  were  to  step  in  and  prevent  his  going 
beyond  Brooklyn — not  by  disturbing  his  passage  across, 
we  will  say,  but  by  stopping  him  at  the  East  River  slips 
on  his  way  back,  and  fining  him  one  third  of  the  value  of 
what  he  brought  in  payment  for  his  produce — would  he  be 
expected  to  thank  them  for  their  kind  services  in  keeping 
him  to  a  market  on  his  own  island,  and  saving  him  the 
expense  of  ferriage  ?  Yet  that  is  what  Protection's 
"  home  market  "  does  for  the  farmer.  It  provides  him  no 
additional  purchasers,  and  only  punishes  him  for  selling 


THE  HOME  MARKET.  211 

beyond  the  country's  borders — thus  enabling  home  dealers 
to  punish  him  similarly  when  he  sells  within  them. 

It  is  the  custom,  the  policy,  and  the  purpose  of  protec- 
tion to  use  phrases  loosely  ;  hence  it  is  necessary  to  stop 
awhile  and  consider  what  is  really  meant  by  a  home 
market,  considered  as  something  advantageous  to  the 
producer.  It  is  not  an  affair,  as  is  heedlessly  assumed,  of 
political  boundaries.  The  market  that  the  producer  wants, 
supposing  the  demand  equally  active  everywhere,  is  the 
one  he  can  reach  over  fewest  obstacles  ;  or,  as  the  obsta- 
cles are  all  measured  by  money,  the  one  to  which  trans- 
portation is  cheapest.  To  prove  that  establishing  a 
manufacture  in  this  country,  which  but  for  protection 
might  have  to  be  carried  on  in  Liverpool  or  Glasgow, 
would  be  any  economic  advantage  to  the  farmer,  it  would 
have  to  be  shown  that  the  cost  of  transporting  his  grain 
and  other  produce  to  the  proposed  site  in  this  country  is 
less  than  that  of  shipping  it  across  the  ocean  ;  and  that, 
in  the  majority  of  cases,  cannot  be  done.  Ocean  freights 
are  low  ;  and  when  we  consider  the  places  where  new 
manufactures  must  be  planted,  and  their  inaccessibility  to 
the  most  of  our  farms,  it  is  easy  to  see  that  there  is  gain 
for  very  few  of  our  farmers  in  locating  consumers  there 
rather  than  in  a  British  seaport.  If  the  manufacture  has 
to  be  started  by  general  contribution,  as  by  means  of  pro- 
tective taxation,  the  great  bulk  of  our  farmers  have  less 
interest  in  seeing  it  started  by  a  New  England  riverside 
or  near  a  Pennsylvania  coal-field  than  in  Liverpool. 
Some  few  farmers,  of  course,  will  have  to  furnish  sup- 
plies for  the  new  factory.  But  they  are  those  living 
in  the  neighborhood,  or  connected  therewith  by  some 
direct  line  of  transportation  ;  the  great  body  are  ruled 
out  of  the  competition  precisely  as  if  they  were  out  of  the 
country. 


212        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 
INSTANCE    OF    A    COUNTRY    NEIGHBORHOOD    TN    MARYLAND. 

The  approved  protectionist  doctrine  that,  in  balancing 
the  welfare  of  different  classes  of  our  people,  a  part  is 
weightier  than  the  whole,  is  conspicuous  in  this  home- 
market  discussion.  That  the  establishment  of  a  factory 
in  a  farming  neighborhood  is  capable  of  advancing  the 
interest  of  the  farmers  close  around  it,  in  so  far  as  it  fur- 
nishes new  demand  for  the  food  they  produce,  and  of  thus 
raising  the  selling  value  of  farms,  is  a  matter  of  frequent 
observation.  That  such  establishment  is  promoted  by 
protective  duties,  those  who  profit  by  the  assumption 
always  assume,  but  I  have  already  proved  that  that  as- 
sumption has  no  such  basis  in  fact  as  they  claim  for  it. 
Farmers  are  quite  as  much  benefited  by  the  establishment 
near  them  of  manufactures  to  which  our  protective  sys- 
tem is  an  oppression  and  a  nuisance,  as  of  those  which  are 
encouraged  by  it.  But  this  is  not  the  most  important 
point,  clear  and  cogent  as  it  is.  I  must  now  show  how 
small  must  be  the  number  that  could  possibly  profit 
in  this  way,  even  though  we  strained  our  conscience  and 
gave  the  credit  of  it  to  protection. 

As  an  illustration,  I  take  the  country  neighborhood 
with  whose  case  I  am  especially  familiar,  Sandy  Spring,  in 
Maryland.  It  has  fairly  good  farming  land,  but  no  mineral 
wealth,  very  scanty  water-power,  and  no  easy  connection 
with  any  important  market.  The  produce  it  sells  is, 
therefore,  necessarily  from  the  farm — hay,  wheat,  corn, 
cattle,  and  some  potatoes.  So  in  the  days  while  yet  the 
tariff  burden  rested  lightly  on  it,  it  is  equally  so  now. 
Not  that  manufactures  have  never  been  tried  in  that 
neighborhood.  There  have  been  several  such  trials,  but 
nothing  has  lasted  except  a  few  grist-mills  and  a  bone- 
beating  mill ;    the  success  of  the    former  being   due  of 


THE  HOME  MARKET.  21  3 

course  to  the  fact  that  their  material  is  produced  and 
their  product  consumed  close  around  them,  and  that 
of  the  latter  almost  solely  to  the  preference  of  the  neigh- 
borhood farmers  for  a  dealer  on  whose  probity  they  could 
depend  ;  sad  experience  having  taught  them  that  there 
are  others  beside  protectionist  politicians  who  are  ready 
to  prey  upon  their  profession,  and  that  the  fertilizers 
bought  and  brought  from  distant  dealers  are  a  fatally 
frail  reed  to  lean  on.  Nor  is  there  any  deficiency  in 
business  enterprise  or  capacity,  as  the  permanent  success 
in  the  community  of  a  fire-insurance  company,  a  bank, 
and  three  turnpike-roads,  in  addition  to  many  well-tilled 
farms,  assures  us.  More  than  one  of  the  sons  of  Sandy 
Spring,  in  Baltimore  and  other  places  not  under  the  same 
stress  of  conditions  as  the  old  home,  have  made  their 
names  known  in  the  business  world.  The  fact  is  that 
whatever  may  be  done  by  tariff  laws  for  settlements  dif- 
ferently situated,  it  is  out  of  their  power  to  bring  any 
industry  to  Sandy  Spring.  Say  what  you  please  about 
their  stimulating  effect  ;  this  all  goes  to  the  places  ap- 
pointed for  the  industry  by  natural  conditions.  If  the 
tariff  were  made  yet  more  stringent,  the  protected  indus- 
try would  not  diffuse  itself.  Raise  it  as  high  as  possible, 
so  high  as  completely  to  cut  off  foreign  demand,  and 
throw  the  producer  of  food-stuffs  back  entirely  on  the 
overstocked  market  in  his  own  country  ;  still  no  place 
situated  like  Sandy  Spring  can  get  any  "  home  market  " 
out  of  it.  There  may  perhaps  be  some  additional  fac- 
tories along  the  swift  New  England  streams,  in  the  heart 
of  the  coal  districts,  or  in  large  cities  ;  some  smelting- 
furnaces  in  the  mountains  of  Pennsylvania  or  Alabama  ; 
but  nothing  within  its  own  reach. 

This    country    neighborhood    demands    our    attention 
here,   not   on   account   of  my    warm    individual    interest 


214        F.CONOMTC  AND  INDUSTRIAL   DELC/S/ONS. 

in  it,  but  because  it  is  in  this  respect  a  type  of  country 
neighborhoods  generally.  At  least  nineteen  out  of  twenty 
of  them  are  under  similar  conditions.  In  the  midst  of 
wide  flat  prairies,  in  clearings  of  the  primeval  forest, 
in  rich  river-bottoms  the  farms  are  found,  and  the  pro- 
tected industries  are  not.  To  those  nineteen  twentieths 
the  account  with  the  protective  system  is  all  debit,  and 
there  is  no  home  market  to  offset  it.  But  because  to 
the  remaining  twentieth  consumers  are  brought  nearer 
and  farms  increased  in  value  b}^  the  establishment  of  fac- 
tories (to  which  protection  is  sometimes  a  stimulus  and 
sometimes  an  obstacle),  all  twenty  twentieths  are  asked  to 
burden  themselves  with  the  cost  of  the  system.  Revolt- 
ing as  is  the  injustice  of  this,  is  not  its  absurdity  even 
more  glaring  ? 

NONE  BUT   THE  FARMER  BENEFITED  BY  HOME  MARKETS. 

It  is  to  be  noticed  that  this  home-market  sauce  always 
appears  as  something  intended  strictly  for  geese,  having 
no  application  to  ganders.  Whatever  advantage  the  pro- 
ducer may  be  supposed  to  draw  from  consumers  alleged 
to  have  been  provided  for  him  within  the  country,  that 
advantage,  it  would  naturally  be  inferred,  belongs  to 
miners  of  coal  and  ores,  and  growers  of  wool,  equally  with 
growers  of  wheat  and  beef ;  but  this  natural  inference  ap- 
pears to  be  unfounded.  Like  the  beast  that  has  once 
tasted  blood,  and  cares  no  more  for  food  that  has  not  cost 
a  life,  those  that  have  been  feeding  on  their  fellow-citizens 
seem  unwilling  to  consider  other  sources  of  gain  ;  and 
notwithstanding  the  demand  for  their  coal  and  their  ore 
or  pig-iron,  which  b\'  the  accepted  protectionist  theory 
that  system  creates  for  them  at  their  door,  they  cr}'  out 
lustily  that  they  are  ruined  by  foreign  cheap  labor  (in  its 


THE   HOME   MARKET.  21$ 

own  country,  of  course),  and  refuse  to  be  torn  from  the 
prey.  We  may  go  further  yet.  We  are  told  that  the 
farmer  has  an  interest  in  the  prosperity  of  those  in  other 
callings  about  him,  on  whom  he  depends  for  purchasers; 
but  so  in  an  even  greater  degree  has  the  manufacturer. 
A  family  needs  nearly  the  same  amount  of  farm  produce, 
whether  it  is  growing  richer  or  poorer ;  but  with  the  man- 
ufactured goods  that  are  not  absolute  necessities,  there 
are  greater  fluctuations — a  demand  much  keener  when 
customers  are  prospering,  much  slacker  when  they  are 
losing.  If  advancing  the  prosperity  of  manufacturers  is 
good  policy,  would  it  not  be  even  better  policy  to  relieve 
the  farmer  of  all  his  needless  burdens,  advance  his  pros- 
perity by  bounties  paid  out  of  general  taxation,  and  invite 
manufacturers  and  others  to  find  their  prosperity  in  his  ; 
and  if  not,  why  not  ?  It  has  again  and  again  been  told 
us,  from  the  days  of  Hamilton  down,  that  this  drawing  of 
distinctions  between  one  calling  and  another  was  all 
wrong,  and  that  the  interest  of  farmer  and  manufacturer 
was  one ;  but  when  has  it  been  proved  that  the  latter, 
any  more  than  the  former,  ought  to  be  the  one? 

CUSTOMERS  PREVENTED  FROM  BECOMING  COMPETITORS. 

Besides  shutting  out  foreign  goods  and  bringing  in  new 
customers,  protection  is  credited  with  relieving  the  farmer 
of  ruinous  competition  from  many  of  the  customers  he 
now  has.  Many  laborers  who  are,  with  our  industries 
diversified  as  at  present,  occupied  at  other  things,  would 
under  free  trade — so  we  hear — be  forced  to  take  to  the 
farms ;  against  such  a  multitude  of  competitors  he  could 
not  sustain  himself,  and  his  lot  would  be  worse  than  ever. 
This  argument  is  usually  joined  with  the  preceding,  and 
an  alluring  contrast  drawn  between  the  army  of  workmen 


2l6        ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

who  are  now  purchasers  of  his  products  and  the  same 
army  turned  into  rivals  with  him  for  the  custom  of  a  re- 
duced number  of  purchasers.  Great  rhetorical  effects  can 
be  produced  when  the  rhetorician  is  under  no  restrictions 
in  stating  his  case.  If  we  would  have  data  to  start  with, 
there  are  two  very  distinct  ways  of  arriving  at  a  conclu- 
sion as  to  the  effect  of  this  increased  competition.  The 
first  is  to  take  somebody's  guess  for  it ;  the  guess  will  be 
made  by  an  interested  party  and  will  of  course  be  as 
highly  colored  as  the  most  eager  lover  of  sensations  could 
wish.  The  other  is  to  throw  on  it  all  the  light  that  expe- 
rience can  give  us,  and  square  our  conclusion  with  that. 
This  way  involves  far  more  trouble  and  time,  and  its  re- 
sults are  far  less  sensational ;  which  suf^ciently  accounts 
for  its  unpopularity  as  compared  with  the  first  way.  Nev- 
ertheless, I  am  unwilling  altogether  to  disregard  it. 

In  1880,  of  all  industrially  occupied  in  the  United 
States,  about  22  per  cent,  were  engaged  in  manufactures 
and  mining;  farming,  professional  and  personal  services, 
trade  and  transportation,  claiming  the  rest.  But  how 
many  of  our  working  population  are  employed  in  indus- 
tries that  are  really  dependent  on  protection  ?  There 
have  been  various  estimates,  depending  on  the  sustaining 
power  ascribed  to  protection  by  those  who  make  them. 
Some  put  the  proportion  as  high  as  15  per  cent.,  others  at 
about  5.  In  my  view,  the  latter  estimate  is  too  high.  To 
put  at  any  such  figure,  nearly  one  fourth  of  the  whole 
number  at  work  in  manufactures  and  mining,  the  number 
of  workers  that  would  be  displaced  by  throwing  their 
business  open  to  free  trade,  is  certainly  a  monstrous  over- 
statement. Let  us  examine  the  matter  a  little  more 
closely.  Taking  up  the  bulky  volume  which  gives  the 
census  figures  for  population  in  1880  (nothing  more  recent 
being  yet  available),  we  find,  about  the  750th  page,  some 


THE   HOME   MARKET.  21/ 

130  occupations  set  down  under  the  head  of  "manufac- 
turing, mechanical,  and  mining."  The  most  numerously 
followed  of  these,  by  far,  is  that  of  carpenters ;  the  next, 
milliners  and  dressmakers.  These  employments  are  not 
protected  ;  neither  the  carpenter  nor  the  dressmaker  could 
be  displaced  by  foreign  competition.  Adding  to  these, 
the  boot-  and  shoe-makers,  blacksmiths,  tailors,  painters 
and  varnishers,  masons  and  bricklayers,  enginemen  and 
firemen,  butchers,  printers  and  engravers,  we  have  ten 
descriptions  of  workmen  who  could  suffer  little  or  nothing 
from  free  foreign  competition.  These  ten  occupations 
alone  make  up  9  per  cent,  of  all  industrials  ;  and  when 
I  add  twenty  or  thirty  others  like  them — or  like  my  own, 
producing  goods  for  export — I  obtain  a  total  of  12 
per  cent,  to  be  deducted.  Looking  now  at  the  remaining 
occupations,  nearly  ninety  in  number,  employing  10  per 
cent,  of  the  industrial  population,  which  I  have  provision- 
ally set  down  as  protected,  the  four  most  numerously 
followed  are  these  :  miners,  cotton  manufacturing,  "  iron 
and  steel  "  machinists.  Mining  for  the  precious  metals 
has  no  protection,  for  coal  practically  none  ;  we  export 
considerable  quantities  of  unbleached  cottons,  so  that 
that  branch  of  industry  must  be  struck  off  from  the 
dependent  list ;  and  so  many  machinists  would  be  needed 
among  us,  even  if  we  imported  all  our  machinery,  that 
that  occupation  might  quite  as  properly  have  been  ex- 
cluded altogether.  I  have  not  gone  further  into  details 
— so  much  here  depends  upon  conjecture  that  it  would  be 
difficult  to  satisfy  others  of  my  results,  even  if  I  could 
satisfy  myself.  But  I  feel  safe  in  saying  that  no  candid 
examiner  of  the  evidence,  however  protectively  disposed, 
could  put  the  class  of  employes  in  dependent  occupa- 
tions— those  who  would  run  any  serious  risk  of  being 
thrown  out  if  free  trade  were  proclaimed  to-morrow — at 


2l8         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

any  higher  figure  than  one  lialf  of  this  last  group  of  lo 
per  cent.  I  can  imagine  the  possibility,  of  course,  that  a 
reasoning  being  might  speak  of  any  and  every  occupation 
as  dependent  on  protection,  if  he  has  been  dreaming  of 
an  industrial  collapse  to  follow  its  abandonment,  under 
which  no  work  could  be  done  or  hired  ;  but  I  confine  my- 
self for  the  present  to  people  who  do  not  take  hysterical 
views. 

Accepting  the  last  estimate,  for  the  sake  of  argument, 
and  rating  our  working  population  in  1891  at  about  22,- 
000,000,  5  per  cent,  would  be  1,100,000.  This  will  seem 
like  a  large  number  to  be  thrown  upon  our  industrial  sys- 
tem, in  competition  with  farmers,  carriers,  the  larger  body 
of  manufacturers  who  gain  nothing  from  protection,  and 
all  the  rest  ;  it  would  be  easy,  if  we  allowed  ourselves  to 
be  swayed  by  guesswork,  to  picture  all  manner  of  fright- 
ful consequences.  But  if  we  stop  to  remember  that  this 
number  is  about  that  of  two  years'  immigration  to  our 
shores  from  foreign  lands — was  decidedly  surpassed  in  the 
years  1881  and  1882 — we  can  infer  from  actual  experience 
how  it  would  probably  affect  us.  The  same  difificulties 
that  we  find  in  disposing  of  two  years'  supply  of  immi- 
grants we  might  reasonably  expect  to  find  in  placing  the 
laborers  who  would  be  thrown  out  by  the  abolition  of 
protection,  even  adopting  this  inflated  estimate :  no 
greater. 

But  that  is  not  all.  We  must  not  neglect  to  consider, 
in  its  effect  on  this  question,  the  stimulus  that  would  be 
given  to  all  our  industries  that  produce  goods  for  export, 
by  increasing  the  purchasing  power  of  their  products  sent 
abroad.  For  every  laborer  thrown  out  in  the  way  spoken 
of  a  new  one  would  be  demanded  in  the  industries  thus 
rendered  more  profitable.  Yet  another  point.  No  laborer 
is  displaced  by  the  vicre  fact  that  the  product  on  ivJiich  lie  is 


THE  HOME   MARKET.  2I9 

engaged  might  be  more  advantageously  purchased  abroad. 
Before  he  can  be  disturbed,  such  purchase  must  be  actu- 
ally made.  To  make  it,  there  must  have  been  sent  or 
pledged  some  product  of  our  country  whose  production 
would  not  otherwise  have  been  called  for — to  provide 
which  the  displaced  labor  is  needed.  The  question,  there- 
fore, what  is  to  become  of  the  labor&rs  thrown  out  of  em- 
ployment is  really  no  question  at  all.  It  is  answered  in 
the  very  conditions  supposed  to  give  rise  to  it,  and  I  feel 
some  surprise  that  any  difificulty  should  ever  have  been 
found  in  so  plain  a  matter.  The  demand  for  American 
labor  is  inherent  in  the  American  demand  for  products  of 
labor,  and  cannot  slacken  unless  we  take  to  wanting  fewer 
things — as  we  are  certain  not  to  do  if  we  are  going  to  get 
them  cheaper.  It  is  as  idle  to  talk  as  though  the  nation 
of  us  had  any  choice  between  getting  what  we  want  by 
American  and  by  foreign  labor,  as  it  is  for  each  individual 
of  us  to  debate  whether  it  shall  be  his  own  work  or  some 
one's  else  that  supports  him.'     What  Americans  use  they 

'  This  is  as  suitable  a  place  as  any  to  meet  Dr.  V.  B.  Denslow's  claim 
"  that  the  making  of  the  article  sought,  in  this  country,  employs,  as  com- 
pared with  its  importation  from  abroad,  two  domestic  capitals  and  two  sets 
of  domestic  laborers,  instead  of  only  one.  .  .  .  Supposing  that,  in  both 
cases,  we  get  the  worth  of  our  corn  in  iron,  in  the  case  of  the  imported 
iron  we  give  employment  only  to  the  American  labor  that  produces  the 
corn,  while  in  the  case  of  the  American  iron,  we  give  employment  to  the 
same  amount  of  American  labor  in  producing  the  corn,  and  to  an  equal 
amount  in  addition,  in  producing  the  iron  "  (pages  560,  572).  This  fallacy 
deserves  a  handsome  refutation,  because  it  is  widespread,  as  well  as  time- 
worn  ;  but  that  is  not  difficult,  i.  If  it  were  the  blessing  Dr.  Denslow 
regards  it,  for  the  government  to  "  give  employment"  by  restrictive  legisla- 
tion, instead  of  leaving  employment  free,  ought  not  his  "  Economic  Philos- 
ophy" to  vindicate  compulsory  labor  on  roads,  ' '  pressed  "  seamen  and  drafted 
armies  ?  2.  He  forgets  that  exchange  has  two  sides.  Taking  his  supposed 
alternative  of  American  and  foreign  iron,  to  be  procured  by  producing 
American  corn,  he  fails  to  see  that  the  foreign  iron-producer,  who  is  in  the 
one  case  a  purchaser  of  American   corn,  must   in   tlie  other  obtain  his  com 


220         ECONOMIC  AND    INDUSTRIAL    DELUSIONS. 

must  get,  directly  or  indirectly,  from  American  labor — or, 
as  I  have  already  suggested,  from  American  stealing.  The 
invention,  therefore,  of  a  stress  on  the  labor  market,  to 
follow  from  any  cause  not  involving  the  consumption  of 
fewer  things  here,  is  a  simple  bugbear.  It  can  alarm  the 
unreflecting  only. 

POLICY    OF    HIRING    PEOPLE    NOT    TO     COMPETE. 

As  a  practical  question,  the  form  in  which  we  ought  to 
consider  the  appeal  to  keep  other  producers  from  becoming 
competitors  by  "protecting"  them  in  a  different  business, 
is  that  very  aptly  given  it  by  Professor  Sumner  :  "  How 
much  can  a  business  man  afford  to  pay  people  for  not 
competing  with  him  ?  "  "  There  you  have  it,  plain  and 
flat."  The  loss  that  the  farmer  will  suffer  by  having 
others  come  into  competition  with  him,  if  a  real  thing,  is 
something  capable  of  expression  in  definite  dollars  and 
cents  :  if  somebody  will  so  express  it,  no\v,  we  can  answer 
Professor  Sumner's  question,  and  can  also  calculate  whether 
the  amount  balances  the  cost  of  protection's  home 
market  to  the  farmer. 

Hiring  people  not  to  compete,  I  admit,  is  a  thing  that 
is  sometimes  done.  One  of  the  courses  a  Trust  is  most 
likely  to  follow,  after  it  has  got  the  whole  country's  pro- 
duction of  an  article  in  its  grip,  is  to  pay  some  of  its 
members  for  lying  idle,  so  that  the  price  may  not  be 
brought    down    by    an    over-supply.       Our    Wood-Screw 

elsewhere.  3.  He  fails  also  to  see  that  the  supposed  second  American  must 
have  corn,  and  must  have  it  from  American  labor,  wherever  the  first  gets 
his  iron.  If  the  iron  is  purchased  abroad,  "  an  equal  amount  in  addition  " 
of  home  labor  must  be  expended  to  meet  this  additional  demand.  Dr. 
Denslow's  policy,  therefore,  calls  merely  for  a  diversion  of  so  much  American 
industry  from  corn-producing  to  iron-producing,  and  no  real  addition. 
Does  he  affect  to  doubt  tliat  home  demand  plus  foreign  demand  gives  more 
employment  in  corn-producing  than  home  demand  alone  ? 


THE   HOME   MARKET.  221 

Trust,  we  are  assured,  has  for  some  time  paid  an  allow- 
ance to  large  producers  in  Birmingham,  in  order  to  keep 
them  from  entering  the  United  States  market.  This 
Trust  has  always  had  a  high  duty  to  protect  it  (from 
which  Major  McKinley  felt  himself  compelled,  by  the 
complaints  it  had  aroused,  to  pare  off  a  ludicrously  thin 
shaving  in  his  new  tariff),  and  that,  in  spite  of  the  disad- 
vantage thus  thrown  upon  the  British,  they  were  able  to 
threaten  our  Trust  so  far  as  to  bring  it  to  terms  of  that 
kind,  is  not  very  easy  to  believe  ;  nor  would  I  believe  it, 
but  that  our  Trusts  actually  do  things  of  very  nearly  that 
sort,  and  yet  make  money.  When  a  dealer  is  bought  out 
of  business  his  "good-will"  is  usually  included  in  the 
purchase;  so  that  he,  too,  is  paid  not  to  compete.  But 
please  take  note  of  the  trait  in  common  that  these  cases 
have.  The  man  who  is  induced  to  refrain  has  in  each  of 
them  some  special  advantage  in  the  competition — ^a  better 
market  to  buy  his  material  in,  or  skill  and  long  experience. 
No  man  of  business  would  think  of  making  such  an  invest- 
ment as  to  buy  off  a  man  who  was  not  equipped  with  some 
advantage  of  that  kind. 

The  competitors  whose  abstinence  the  farmer  is  recom- 
mended to  purchase  by  the  payment  of  high  protective  du- 
ties, are  of  quite  another  description.  They  are  hands  that, 
however  highly  skilled  at  the  business  they  have  learned, 
are  necessarily  green  at  his  ;  and  against  them  he  would 
himself  enjoy  every  advantage  in  competition.  Does  not 
that  very  circumstance  insure  him  the  probability — the 
certainty,  in  fact — that  the  manufacturers  and  workmen 
who  might  here  and  there  be  driven  from  an  employment 
made  unprofitable  by  free  trade,  would  not  come  to 
trouble  him  as  rivals  ?  Never  ;  they  would  seek  uses  for 
their  mechanical  skill  in  other  directions — and,  as  I  have 
already  shown,  could  not  fail  to  find  them. 


222        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

If  hiring  men  not  to  become  our  competitors  is  in  most 
cases  a  poor  investment,  what  shall  be  said  of  hiring  men 
to  compete  with  us  ?  Our  wheat-growing  farmer  may  be 
doing  just  that  when  he  maintains  a  tariff  on  raw  wool. 
One  of  my  correspondents  writes  to  me  from  Paraguay 
that  the  wool-growers  of  that  region,  who  would  have  re- 
mained wool-growers  if  our  country  had  consented  to  buy 
their  product,  are  now  turning  their  attention  and  capital 
to  wheat,  and  preparing  to  compete  with  our  own  wheat- 
raisers  for  the  English  trade.  Is  it  for  such  a  result  as 
that  that  we  bend  beneath  the  burden  of  costly  clothing? 

TRUST    TO    COMMON-SENSE. 

In  meeting  these  three  home-market  arguments,  I 
think  I  have  disposed  of  the  whole  case  for  protection,  so 
far  as  it  touches  agricultural  interests,  and  thrown  back 
the  question  upon  the  principles  set  forth  in  the  fore- 
going chapters  ;  where  I  am  well  content  to  leave  it.  The 
one  word  of  caution  that  has  to  be  addressed  to  the 
farmer,  as  to  the  day-laborer,  and  to  every  one  whom  pro- 
tection's agents  flatter  with  the  pretence  that  he  is  the 
bright  particular  object  of  their  unflagging  solicitude,  is 
the  same  that  is  needed  by  those  in  danger  of  falling  a 
prey  to  confidence-operators  in  other  lines :  hold  fast  to 
plain  sound  common-sense.  Is  it  in  the  least  likely  that 
the  operators,  seeing  a  way  in  which  money  can  be  made 
by  their  scheme,  would  really  give  it  away  to  others  in- 
stead of  grasping  it  for  their  own?  If  they  are  able  to 
confuse  you  on  this  tariff  question — as  in  a  "  bunco  "  or 
"green-goods"  speculation — it  is  for  the  purpose  of 
defrauding  you.  If  they  know  more  about  it  than  you 
do,  their  knowledge  is  not  going  to  bring  you  any  benefit 
that  they  can  possibly  keep  for  themselves. 


CHAPTER    VIII. 

THE  IDEAL  "  REVENUE  WITH  INCIDENTAL  PROTECTION." 

Not  infrequently  we  find  champions  of  our  tariff  laws 
who  are  contemplating,  not  something  in  real  tangible 
existence,  but  some  airy  creation  of  their  own  minds, 
and  they  appear  to  argue  from  the  fact  that  there  is  no 
jar  in  the  running  of  the  machinery  their  fancy  has  con- 
trived, all  being  orderly  and  harmonious  there,  that  some 
such  desirable  state  of  things  must  exist  in  reality.  One 
of  my  most  valued  friends  used  to  show  this  bent.  He 
was  a  man  of  strong  intelligence,  broad  views,  high  princi- 
ple, keen  interest  in  public  affairs ;  yet  his  leading  argu- 
ment for  protective  duties  (next  to  the  association  of 
them  in  his  mind  with  his  political  paragon.  Clay)  ran 
about  as  follows :  "  The  government  must  collect  the 
greater  part  of  its  necessary  revenues  indirectly  ;  there  is 
no  use  in  advocating  any  other  plan,  for  the  people 
would  not  submit  to  it — would  certainly  feel  it  more  of  a 
burden,  whatever  the  truth  might  be.  Now,  in  levying 
this  indirect  tax,  is  it  not  better  to  adjust  it  in  such 
a  way  as  to  encourage  some  domestic  enterprise,  than  to 
make  it  a  tax  and  nothing  else  ? "  Where  a  piece  of 
machinery  that  could  do  but  one  kind  of  work  at  once,  is 
advertised  to  do  two  kinds,  somebody  is  likely  to  be 
cheated  in  it.  The  man  who  expects  to  support  the  gov- 
ernment by  a  tax  that  has  any  real  efificiency  for  protec- 
tion, and  the  one  who  looks  for  effective  protection  to  a 

223 


224        J:('OXOj)//C  ANJ)   lA'Jn'STh'IAI.    DELUSIONS. 

tax  tluit  brinies  in  any  considerable  revenue,  are  alike 
destined  to  disappointment,  because  the  proposed  ends 
arc  incompatible.'  It  is  needless  to  explain  that  the  chief 
use  of  arguments  of  this  kind  is  in  the  hands  of  the 
people  who  propose  a  duty,  and  seek  votes  in  its  favor 
from  each  of  two  very  different  groups — of  those  want- 
ing a  tariff  for  revenue,  and  of  those  wanting  a  tariff  for 
protection — each  being  led  to  find  in  the  proposed  duty 
the  effect  it  especially  wants.  Nor  need  I  repeat  the 
proof  that  encouragements  of  this  kind  usually  do  less 
to   advance   than   to    repress   domestic   enterprise.      The 

'  Again  I  am  conscious  of  having  stated  a  principle  which  Dr.  V.  B. 
Denslow  has  "  demolished."  But  Dr.  Denslow  must  not  be  discouraged  if 
he  encounters  considerable  vitality  in  the  principles  of  political  economy, 
even  after  his  demolition  of  them — his  proofs  that  Astronomy  is  misled,  and 
"  the  Sun  do  move."  He  appears  to  infer  that  a  revenue  duty  may  be  also 
protective,  from  the  fact  that  large  revenues  have  been  collected  under 
tariffs  intended  to  protect,  and  from  his  discovery  that  "  the  foreign  producer 
pays."  That  discovery  is  established,  it  seems,  by  its  author's  ability  (i)  to 
sow  strife  among  his  adversaries,  showing  that  according  to  some  the  whole 
duty  is  paid  by  farmers,  and  to  others  97  per  cent,  of  it  by  manufacturers  ; 
(2)  to  .speak  of  "the  same  product"  as  being  exported  and  imported, 
wherever  the  Treasury  reports  show  exports  and  imports  under  the  same 
heading.  For  example,  he  infers  from  our  large  export  of  breadstuffs  that 
the  Canadians  must  pay  all  the  duty  on  the  barley  we  import — edible  grains 
generally  being  counted  in  his  statistics  as  breadstuffs.  Similarly,  our  export 
of  cotton  and  iron  manufactures  seems  to  convince  him  that  our  producers 
'  fix  the  price  of  all  such  manufactures,  and  that  any  foreign  maker  of  any 
cotton  or  iron  product  must  pay  our  duty  if  he  sends  it  to  us.  What  induces 
a  foreigner  to  sell  to  us  at  such  a  sacrifice,  when  he  might  get  the  same  price 
as  we  in  the  country  to  which  we  export,  this  "economic  philosopher" 
fails  to  show.  For  such  irrelevancies  a  mere  statement  is  surely  sufificient. 
I  shall  consider  the  question  "  Who  pays?"  in  my  next  chapter.  The  point 
that  is  here  significant  is  that  no  protection  to  home  production  could  come 
from  any  duty  the  foreigner  might  pay,  any  more  than  from  that  paid  by 
ourselves.  Protection  arises  from  the  duty  that  is  not  paid  at  all,  as  a  duty. 
So  far  as  importations  take  place,  whoever  bears  the  cost  of  them,  so  far  the 
duty  fails  to  be  protective. 


''REVENUE   WITH  INCIDENTAL   PROTECTION."      22$ 

point  I  wish  here  to  bring  out  is  that  such  arguments 
relate  to  a  fancied  tariff  which  works  just  as  it  is  planned 
to  work,  and  which  can  be  made  surpassingly  effective  by 
simply  making  the  plan  sufficiently  comprehensive ;  to 
things  which  some  conceivable  tariff  might  do,  rather 
than  those  which  any  actual  tariff  is  likely  to  do. 

This  argument,  which  had  so  much  weight  with  my 
friend,  but  which  is,  after  all,  more  suggestive  of  an  ex- 
hortation to  dull  the  edges  of  our  chisels,  in  order  to 
make  them  serve  at  the  same  time  as  screw-drivers,  than 
of  a  clear  comprehension  of  the  problem  of  Ways  and 
Means — this  argument,  in  some  form,  is  constantly  com- 
ing up  in  tariff  discussion.  It  is  at  the  bottom,  I  believe, 
of  the  declaration  which  the  straddling  phrasemongers 
who  concoct  our  platforms  have  made  so  familiar :  "  We 
desire  a  tariff  for  Revenue  with  Incidental  Protection." 

DISTINCTION    BETWEEN    REVENUE    AND    PROTECTIVE    TARIFFS. 

A  defence  of  protection  is  often  based  on  the  value  to 
our  government  of  the  income  from  import  duties ;  that 
is  to  say,  simply  commends  getting  hold  of  a  large 
amount  of  money  by  taxation  with  only  accidental  refer- 
ence to  the  mode  of  getting ;  and,  so  far  as  it  bears  on 
tariffs,  tends  to  favor  their  revenue  rather  than  their  pro- 
tective uses.  Such  are  the  pleas  for  a  scheme  of  coast 
defences,  for  a  large  navy,  for  liberal  harbor  and  river 
expenditure,  for  national  aid  to  education  in  illiterate 
States,  for  profuse  pensions.  It  forms  no  necessary  part 
of  the  present  study  of  tariffs  to  give  an  opinion  as  to  the 
propriety  or  impropriety  of  these  various  ends.  They 
agree,  certainly,  in  demanding  a  great  deal  of  money  to 
carry  them  out,  which  in  turn  necessitates  high  taxation 
of  some  kind.  Direct  taxes,  or  stamp  duties,  or  income 
15 


226        F.CO/VOMIC  AND  INDUSTRIAL   DELUSIONS. 

rates,  or  internal  taxes,  could  supply  the  need  as  well  as 
import  duties;  but  so  far  as  we  depend  on  the  last 
source  wc  have  to  provide  against  keeping  goods  out, 
aiming  rather  to  bring  in  as  many  as  possible,  so  as  to 
have  a  large  revenue.  The  promoters  of  high  taxation 
are  always  very  ready  to  sing  the  praises  of  the  incidental 
protection  which  their  impost  brings  with  it,  but  that 
protection  marks  its  failure,  not  its  efficiency,  as  a  revenue 
instrument. 

It  is  often  carelessly  said,  for  instance,  that  our  protec- 
tive tariff  gave  credit  and  strength  to  the  nation  when 
credit  and  strength  were  so  much  needed,  thirty  years 
ago.  I  am  in  no  way  concerned  to  deny  the  use — even 
the  absolute  necessity — of  the  war  duties  while  the  war 
continued.  They  were  advocated,  were  voted,  were 
maintained  by  many  who  had  been  staunch  free-traders 
before  the  necessity  for  high  taxation  arose  ;  by  many 
who  have  been  most  vigorous  in  demanding  a  mitiga- 
tion of  their  abuses  now  that  the  necessity  has  passed. 
Most  conspicuous  among  these  we  find  Lincoln's  first 
and  his  last  choice  for  head  of  the  national  Treasury. 
The  fact  is  that  the  duties  gave  support  to  the  govern- 
ment, only  so  far  as  they  failed  to  protect  domestic 
industries.  The  two  objects  for  which  imports  are 
taxed,  to  bring  revenue  to  the  taxing  power  and  to  dis- 
courage importation,  are  either  incompatible  or  always 
in  interference  with  each  other.  For  the  former  purpose 
large  importations  are  demanded,  while  these  defeat  the 
latter.  Perfect  protection  gives  the  domestic  producer 
complete  control  of  the  market  by  the  stoppage  of  all 
importation  of  the  duty-protected  product ;  but  this 
brings  no  income,  and  hence  no  strength  of  any  kind, 
to  the  government.  The  distinction  is  such  a  plain  one, 
that  it  would  have  seemed  superfluous  to  mention,  but 
for  the  fact  that    the    high-tariff    advocates    have    made 


''REVENUE  WITH  INCIDENTAL  PROTECTION."      227 

this  necessary,  by  ascribing  to  protective  duties  such 
service  as  could  only  have  been  done  by  duties  not 
protective,  and  ceased  when  the  duties  became  protec- 
tive ;  as,  after  the  lowering  of  prices  through  abatement 
of  extravagant  war-expenses,  accession  of  an  army  of 
workers  to  the  productive  industries,  establishment  of 
new  transportation  lines,  and  improvement  of  methods 
by  new  inventions,  could  not  fail  to  occur.  A  duty  of 
twenty  cents,  for  example,  on  an  article  costing  a  dol- 
lar to  produce,  may  amount  to  less  than  the  home 
manufacturer  requires  to  balance  his  dearer  materials, 
and  be  therefore  a  revenue  duty  ;  while  the  same  duty, 
when  cost  of  production  has  fallen  to  thirty  cents,  gives 
the  home  producers  a  monopoly. 

It  may  be  pointed  out  in  passing,  that  instances  of 
this  kind,  of  which  there  are  many  in  our  business 
history  since  the  first  Morrill  tariff — particularly  in  the 
iron-ware  trade — form  an  objection  to  large  import  duties 
as  means  of  raising  revenue  which  has  no  small  weight 
with  thoughtful  minds.  The  same  rate  on  which  gov- 
ernment to-day  depends  for  support,  and  which  brings  in 
an  ample  revenue,  may  to-morrow  fail  to  yield  anything, 
thus  compelling  it  to  levy  some  new  tax.  However  care- 
fully tariff  rates  are  adjusted  to  the  conditions  now  obtain- 
ing, the  changes  of  a  few  years  will  inevitably  derange 
the  adjustment,  and  necessitate  another  overhauling  of 
the  schedules.  What  an  unsettling  this  gives  to  all 
business — how  unfavorable  the  comparison  with  taxes 
under  which  "  incidental  protection  "  is  not  sought — I 
need  not  stop  to  show. 

NECESSITY    FOR    A    REVENUE    TARIFF. 

So  far  ahead  as  we  can  now  see,  the  support  of  our 
government  must  continue  to  depend  principally  on  im- 
port duties,  in  any  event.     The  income  tax,  so  much  used 


228         F.COA'0.-\nC  A\n   INDUSTRIAL    DELUSIONS. 

in  England,  has  not  proved  successful  here.  Its  inquisi- 
torial character  makes  it  objectionable  to  some ;  the 
facility  and  frequency  with  which  it  can  be  evaded,  to 
others.  No  tax  which  gives  impunity  to  dishonesty,  and 
redoubled  burdens  to  the  honest,  can  ever  be  generally 
acceptable.  The  excise,  or  tax  on  domestic  productions, 
has  proved  an  uncertain  reliance  with  us ;  it  has  already 
been  shorn  from  everything  but  alcoholic  liquors  and 
tobacco,  every  revision  of  the  tariff  has  made  another  cut 
in  it,  and  a  further  reduction  seems,  in  the  absence  of  any 
decided  movement  to  sustain  it,  much  more  probable 
than  any  increase.  Stamp  imposts  are  apt  to  be  more 
productive  of  annoyances  than  of  revenue.  Direct  taxa- 
tion is  not  forbidden,  but  is  certainly  gravely  discouraged, 
by  the  provision  of  the  Constitution  which  requires  that 
it  be  levied  on  the  States  in  proportion  to  population. 
No  one  would  believe  such  an  apportionment  equitable, 
and  this  objection — were  there  no  others — would  suffice 
to  defeat  it. 

A  direct  tax,  levied  on  some  kind  of  property  that 
could  not  escape  the  assessor,  proportioned  to  the  net 
productive  capacity  of  that  property  and  not  to  the  num- 
ber of  inhabitants,  might  be  secured  by  the  cumbrous 
process  of  Constitutional  amendment,  and  would  have 
manifest  advantages.  Direct  taxes  are  less  wasteful, 
because  less  easily  shirked,  and  partly  because  those  of 
whom  they  are  collected  are  usually  the  ones  who  finally 
sustain  them  ;  the  indirect  class  diminish  sales  of  articles 
by  increasing  the  price,  and  so  force  the  dealer  to  exact 
higher  profits,  in  order  to  give  him  the  percentage  neces- 
sary to  keep  him  in  business.  Direct  taxes  are  fairer  ; 
taxes  on  consumption  bear  proportionally  more  heavily 
on  the  poor.  The  amount  of  clothes  a  family  needs  is 
not  at  all  in  proportion  to  its  wealth.     The  case  is  made 


"■REVENUE   IVITJf  JXCIDEjVTA L    PROTECTION:'      229 

worse  by  the  practice  of  levying  duties  on  a  specific  rather 
than  an  advaloran  basis  ;  for  thus  the  buyer  of  lower-priced 
goods  is  made  to  pay  a  larger  proportion  of  their  value 
than  the  buyer  of  costly  goods.  The  very  objections 
most  often  made  against  direct  taxes,  that  the  payer  is 
more  keenly  conscious  of  them,  and  that  his  convenience 
is  not  consulted  in  the  time  of  paying,  as  when  the  tax  is 
lumped  with  the  cost  of  his  purchased  supplies,  are  not 
objections  unmixed  ;  for  constituents  are  thus  led  to  hold 
the  legislator  to  stricter  account,  and  to  restrain  him  more 
effectively  from  squandering  their  resources.  All  these 
considerations  have  been  ably  urged  by  my  friend  Henry 
George,  with  the  earnestness,  tact,  good  sense,  and  sterling 
patriotism  that  he  carries  into  everything  he  takes  hold 
of ;  and  although  too  conscious  of  the  dif^culties  attend- 
ing the  practical  introduction  of  his  measures  for  direct 
taxation,  to  anticipate  their  speedy  adoption,  I  cannot 
deny  the  force  of  his  argument. 

Facts  being  as  facts  are,  however,  I  can  only  look,  with 
the  great  majority  of  my  countrymen,  to  duties  on  im- 
ports as  the  source  from  which  our  general  government  is 
to  draw  its  chief  supplies,  at  all  events  for  many  years  to 
come.  The  point  where  a  difference  from  many  of  my 
fellow-countrymen  arises,  is  that  they  look  upon  it  as  a 
triumph  of  legislative  contrivance  if  the  duties  fail  to 
yield  revenue  in  consequence  of  a  production  in  this 
country,  under  economic  disadvantages,  of  the  articles  on 
which  they  are  levied,  so  that  the  imposition  of  a  greater 
number  of  such  duties  is  necessitated  ;  while  in  miy  view 
every  additional  tax  is  an  additional  evil,  and  no  interfer- 
ence by  government  with  the  normal  course  of  business 
can  bring  a  net  balance  of  benefit.  By  choosing  luxuries 
for  taxation,  so  far  as  we  can,  and  fixing  the  rates  so  low 
that  they  will  not  defeat  their  object  by  putting  a  stop  to 


230        ECONOMIC  AMD  INDUSTRIAL  DELUSIONS. 

importations,  we  may  reduce  to  a  minimum  tlic  neces- 
sary evils  of  this  mode  of  collecting  a  revenue. 

MINOR    MOTIVES    FOR    HIGH    TAXATION. 

As  I  have  said,  the  question  of  the  desirability  of  the 
various  expenditures  of  money,  which  may  be  advocated 
on  account  of  the  high  taxation  they  require,  is  not  one 
which  necessarily  comes  up  in  a  discussion  of  the  case  for 
protection.  But  neither  is  it  altogether  to  be  avoided, 
and  I  have  no  disposition  to  step  out  of  its  way.  Op- 
posed as  are  the  interests  of  revenue  and  protection,  it  is 
not  always  easy  to  decide,  in  regard  to  a  particular  duty, 
which  interest  it  was  imposed  to  advance  ;  it  may  often 
happen,  then,  that  it  is  advocated  for  one  purpose  and 
really  serves  the  other.  This  uncertainty  is  a  "  sweet 
boon  "  to  those  statesmen  who  seek  either  protection  to 
influential  constituents  in  the  guise  of  revenue  duties,  or 
else  access  to  a  great  deal  of  money  under  cover  of  pro- 
tection to  home  industries.  Certain  it  is,  whatever  the 
explanation,  that  the  same  men  are  usually  advocates  of 
liberal  expenditures  and  of  protective  taxation.  It  seems 
therefore  worth  while  to  look  briefly  into  the  undertakings 
chiefly  advised,  and  see  whether  or  not  their  claims  to 
huge  appropriations  of  money  are  well  founded. 

I.  Coast  Defences  and  War  Vessels. — Because  we  should 
be  compelled,  if  in  danger  of  an  immediate  attack,  to 
turn  our  energies  with  great  vigor  into  these  directions,  I 
do  not  conclude  that  it  is  advisable  to  make  such  prepara- 
tions now.  In  the  first  place,  the  risk  from  their  neglect 
is  much  exaggerated.  The  rapid  growth  of  an  efificient 
navy  in  our  civil  war,  out  of  very  promiscuous  material, 
was  observed  by  other  nations,  and  our  ability  to  get  up 
a  similar  one  again  will  be  a  factor  in  the  problem  which 


"REVENUE   WITH  INCIDENTAL   PROTECTION."      23 1 

none  of  them,  however  mettlesome  or  hostile,  will  venture 
to  neglect.  Even  if  it  be  true  that  any  one  of  many 
European  powers  could  "  lay  under  contribution  "  one  of 
our  coast  cities  before  we  could  prepare  to  drive  away  its 
fleet,  it  does  not  follow  that  it  will  avail  itself  of  the 
opportunity,  knowing  as  it  would  what  a  reckoning  it 
would  have  to  meet — how  certain  we  should  be  to  retali- 
ate, after  we  had  set  to  work  to  provide  ourselves  with 
the  means  of  enforcing  our  claims.  Those  to  whom  this 
view  will  appear  fanciful  are  the  unreflecting  ones  who 
have  not  discovered  that  the  security  of  the  individual 
citizen  who  puts  himself  in  the  power  of  a  foreign  coun- 
try by  crossing  its  borders,  is  of  exactly  the  kind  I  have 
described.  In  the  second  place,  as  has  often  been  shown, 
improvement  in  war  ships  and  means  of  defence  is  so 
rapid  in  these  days  of  invention,  that  the  preparation 
quite  suitable  for  repelling  an  attack  made  this  year  would 
be  sure  to  be  antiquated  a  few  years  hence.  So  that  the 
proposed  defence  is  confessedly  insufficient,  against  any 
but  the  most  imminent  perils.  More  important  reasons 
for  declining  to  arm  ourselves  with  a  view  to  hostilities,  I 
have  already  given,  in  declaring  my  firm  belief  that  if  we 
wish  peace  we  ought  to  prepare  for  peace. 

2.  Subsidies  to  Merchant  Vessels. — Expenditures  in  this 
way,  I  am  willing  to  admit,  might  under  certain  imagina- 
ble circumstances  be  expedient.  But  their  small  power 
to  advance  any  end  more  important  than  the  personal 
comfort  of  the  individuals  to  whom  they  are  paid,  has 
already  been  amply  shown,  and  the  absurdity  of  using 
such  feeble  means  for  restoring  a  carrying  trade  that  we 
have  so  long  used  and  continue  to  use  such  vigorous 
means  for  repressing,  scarcely  needs  further  exposure. 

3.  Harbor  and  River  Ijnprovenients. — The  battle  over 
the  principle  of  these  has  lasted  long,  and  no  sign  of  a 


232         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

truce  is  in  sight.  The  strongest  plea  for  them,  supposing 
their  eventual  utility  conceded,  appears  to  be  that  the 
preponderance  of  gain  over  cost  is  often — if  not  usually — 
too  far  in  the  future  to  tempt  private  capital,  though  cer- 
tain enough  to  warrant  investment  by  somebody,  and  too 
important  to  be  overlooked  or  neglected.  Theoretical 
decisions  on  such  points  are  perhaps  difficult  for  us  to 
reach,  in  perfect  security,  but  it  is  not  difficult  to  judge 
such  "  river  and  harbor  bills  "  as  have  passed  our  Congress 
in  the  last  twenty  years,  A  few  enterprises  of  the  char- 
acter just  set  forth — important  to  the  commerce  of  the 
country  generally,  and  destined  after  some  years  to  pay 
more  than  their  cost,  but  involving  so  much  expense  in 
proportion  to  immediate  gain  that  no  private  company 
could  be  induced  to  undertake  them — along  with  a  great 
many  schemes  bearing  a  superficial  resemblance  to  these, 
but  intended  for  no  better  purpose  than,  by  spending 
public  money  in  some  particular  Congressman's  district, 
to  secure  the  aid  of  such  of  his  constituents  as  are  to  be 
influenced  by  petty  bribes  of  the  kind,  in  promoting  the 
return  to  our  great  council  of  a  member  so  "  useful." 
With  regard  to  these  expenditures,  since  we  have  not 
alone  to  consider  what  they  might  theoretically  be  if 
studied  out  and  resolved  on  impartially,  but  what  shape 
they  are  to  assume  in  passing  through  our  Houses  of 
Congress,  our  conclusion  should  be,  I  think,  that  they 
have  not  such  importance  as  to  call  for  high  taxation 
to  provide  for  them. 

4.  National  Aids  to  Education. — Public  schools  through- 
out our  territory,  supported  from  a  general  fund,  are  one 
of  the  institutions  of  which  our  republic  is  proudest. 
They  are  not  something  that  was  "  struck  off  at  one  time 
by  the  brain  and  purpose  of  man,"  but  have  grown  up 
out  of  conditions  very  different  from  those  now  obtaining. 


''REVENUE   WITH  INCIDENTAL   PROTECTION:'      233 

The  Hebrews  have  always  been  zealous  educators.  The 
central  feature  of  their  faith  being  a  Sacred  Book,  instead 
of  a  living  priesthood,  missionary  effort  was  naturally 
spent  in  breaking  down  barriers  between  believer  and 
Book,  and  the  knowledge  of  letters  acquired  a  religious 
character  far  transcending  mere  utility.  The  Protestant 
Reformation  was  in  many  ways  a  turning  back  to  the 
Hebrew  ideal,  from  one  that  had  become  widely  different. 
Those  who  first  settled  and  stamped  their  character  upon 
the  New  England  colonies,  Protestants  of  the  Protestants, 
were  noted  in  many  ways  for  the  attraction  by  which 
they  were  drawn  to  Hebrew  models  ;  and  the  system  of 
common  schools  which  they  devised,  after  which  those  of 
our  whole  country  have  been  patterned,  was  thus  un- 
doubtedly in  its  origin  a  feature  of  the  theocracy  in  which 
they  sought  their  ideal  government.  The  State  school 
was  a  necessary  part  of  the  State  religion.  At  present, 
although  the  religious  character  and  mission  of  school 
education  are  no  longer  insisted  on,  and  must  under  a 
government  based  on  our  Federal  Constitution  be  even 
disavowed,  there  is  a  great  deal  of  the  early  crusader 
spirit  in  the  measures  chosen  for  advancing  it,  and  this 
zeal  has  certainly  need  to  be  tempered  with  a  little  cal- 
culation. The  universally  admitted  value  of  schools 
planned,  founded,  supported,  and  governed  by  the  com- 
munities that  receive  benefit  from  them,  does  not  attach 
to  schools  under  patronage  of  a  remote  power,  supported 
by  money  which  the  people  among  whom  it  is  spent  have 
had  no  especial  part  in  raising,  responsible  to  an  authority 
far  outside  the  community  itself.  Little  progress  is  pos- 
sible where  no  grievance  can  be  corrected,  no  improve- 
ment made  in  a  public  building  even,  without  a  special 
mission  from  Eastern  Siberia  to  St.  Petersburg  and  back. 
So,  though  the  lover  of  his  country  rejoices  in  every  new 


234        KCONOAfIC  AND   INDVSTRJAf.    /)/-:/. IKS/ONS. 

evidence  that  reaches  him,  of  the  popularity  n{  common 
schools  on  the  New  England  plan,  the  project  of  scatter- 
ing $77,000,000  of  our  money  to  promote  them  in  places 
that  the  spontaneous  movement  has  not  reached,  is  less 
suggestive  of  blessings  than  of  "  river  and  harbor  bill " 
abuses. 

THE    nation's    debt    TO    THE    SOLDIER.' 

Most  important  among  the  uses  for  which  a  large 
revenue  is  desired,  are  pensions  to  our  veterans  and  their 
representatives.  After  giving  us  a  reconstructed  Union, 
no  more  sacred  duty  was  thrown  upon  our  legislators 
than  to  provide  for  the  disabled  among  those  who  had 
preserved  it ;  "  to  bind  the  nation's  wounds,  to  care  for 
him  who  shall  have  borne  the  battle,  and  for  his  widow 
and  orphan."  Not  that  a  government  has  gratitude,  or 
can  be  expected  to  be  swayed  by  such  considerations  as 
give  rise  to  gratitude  in  its  individual  citizens,  but  from 
the  necessary  conditions  of  its  existence.  There  can  be 
no  question,  the  first  duty  of  a  government  is  to  survive, 
whatever  functions,  narrow  or  extensive,  it  exercises  after 
its  survival  is  assured  ;  and  if,  in  order  for  this,  it  becomes 
necessary  to  call  on  a  citizen  to  risk  limb  and  life  in  its 
behalf,  that  citizen  ought  to  be  insured  against  what 
would  be  the  bitterest  part  of  his  sacrifice,  the  feeling 
that  his  patriotic  service  may  make  him  a  helpless  burden 
on  charitable  neighbors,  or  deprive  his  family  of  all  sup- 

'  After  the  few  paragraphs  under  this  head  had  been  given  to  the  printer, 
the  author  had  the  pleasure  of  reading  an  essay  on  "  Pensions  and  Social- 
ism," by  W.  M.  Sloane,  Professor  in  Princeton.  In  that  essay  he  found, 
not  only  his  own  argument  anticipated — almost  to  the  very  details — but  a 
weighty  warning  added  :  that  every  plea  for  pensions,  when  logically 
followed  up,  led  straight  to  Socialism.  Perfectly  true,  and  ably  proved  ; 
but  of  what  piece  of  protective  legislation  could  not  the  same  truth  be 
shown  ? 


"  RRVENUE   WITH  INCIDENTAL   PROTECTION."      235 

port.  Such  an  insurance  the  government  constructively 
undertakes  for  every  volunteer  in  its  defence.  Govern- 
ments can  be  bound  only  by  contracts,  the  nature  of 
which  should  be  clearly  borne  in  mind  by  all  concerned. 
Whatever  feeling  of  gratitude  toward  our  veterans  may 
be  felt  by  private  citizens  who  are  capable  of  gratitude, 
the  governmental  machine  incurs  no  obligations  except 
under  such  implied  contract  ;  none  until  the  one  seeking 
benefit  from  it  has  undertaken  to  prove  that  a  disability 
exists,  and  was  incurred  in  the  government's  service. 
The  reason  for  the  existence  of  any  obligation  at  all,  lies 
in  the  necessity  of  assuring  the  government  that  it  shall 
find  defenders  in  future  emergencies,  by  guaranties  of 
security  against  the  most  grievous  consequences  of  suffer- 
ing in  its  service.  To  my  mind  there  is  grave  error,  and 
even  real  danger,  in  the  belief  that  the  government  owes 
any  citizen  anything,  except  under  terms  of  a  contract, 
express  or  plainly  implied. 

It  is  unfortunate  in  its  effect  on  the  beneficiaries  them- 
selves. There  are  few  indeed  among  mortals  to  whom 
the  prospect  or  possibility  of  getting  some  good  thing  on 
any  terms  except  explicitly  earning  it,  proves  otherwise 
than  demoralizing.  All  exemplifications  of  this  trait  of 
human  nature  may  not  be  so  disgraceful  as  the  scenes  at 
the  "  opening  "  of  a  new  tract  of  land  under  the  provi- 
sions of  the  Homestead  Law,  or  those  at  the  Washington 
Department  buildings  after  the  installation  of  a  new 
Administration,  but  it  is  clear  that  even  the  best  of  us 
are  not  to  be  trusted  with  the  hope  of  receiving  a  gratuity 
by  Executive  favor  or  Congressional  vote.  There  is  no 
disrespect  toward  our  veteran  soldiers,  therefore,  in 
declining  to  expose  them  to  the  temptation. 

It  is  yet  worse  in  its  effect  on  the  legislator.  When  no 
limit  is  set  on  his  expenditure  of  public  money,  he  is  too 


236        ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

often  led  to  make  it  a  matter  of  favoritism,  and  regulate 
the  bestowal  of  his  favors  by  the  effect  he  foresees  in 
them,  on  his  prospect  of  re-election.  The  chase  after  the 
"  soldier  vote  "  that  our  Congress  has  almost  every  ses- 
sion indulged  in — one  party  striving  to  go  farther  than 
the  other  would  dare  to  accompany  it,  in  spending  the 
money  of  which  all  were  trustees,  the  other  terrified  into 
joining  in  every  extravagance  by  the  dread  of  being  left 
behind,  is  one  of  the  least  gratifying  pages  of  our  recent 
history.  Our  last  President  did  what  he  could  to  moder- 
ate that  scandal ;  and  though  he  lost  his  own  re-election 
by  it,  it  will  hereafter  be  acknowledged  that  he  was  in 
nothing  more  conscientious,  in  nothing  did  he  better  earn 
the  gratitude  of  his  country,  and,  I  hesitate  not  to  add, 
of  the  disabled  soldiers  themselves,  than  by  his  careful 
scrutiny  and  criticism  of  pension  bills. 

It  is  subversive  of  the  proper  functions  of  a  government. 
We  should  not,  I  am  willing  to  admit,  be  too  dogmatic  as 
to  what  those  proper  functions  are.  Many  able  thinkers 
have  held  the  belief  that  government  has  no  right  to  any 
other  function  than  that  of  seeing  that  the  equal  rights  of 
the  citizen  are  nowhere  transgressed,  and  "  whatsoever  is 
more  than  this  cometh  of  evil."  I  have  not  space  to  set 
forth  the  ways  wherein  I  find  the  assumed  grounds  of  their 
behef  to  be  supposititious  and  unsound  ;  but  I  am  as  ready 
as  any  one  can  be  to  maintain  that  where  we  have  no  light 
from  experience  as  to  the  practical  working  of  a  measure  the 
activity  of  government  should  be  limited  rather  than 
amplified.  Again  to  quote  from  Grover  Cleveland,  "  The 
people  should  support  the  government,but  the  government 
should  not  support  the  people."  If  any  other  ways  are  open 
for  the  expression  of  the  pity,  generosity,  and  gratitude 
of  the  citizen,  he  should  not  have  recourse  to  so  clumsy 
and  wasteful  an  agency  for  the  purpose  as  government. 


"REVENUE   WITH  INCIDENTAL   PROTECTION."      237 

Very  many  points  have  been  omitted  from  this  hasty 
survey  of  the  subject.  I  am  unwilling  to  deal  otherwise 
than  very  gently  with  the  old  soldier,  however  wild  the 
din  in  my  ears  about  some  huge  sum  that  the  taxpayers 
are  alleged  yet  to  owe  him  for  his  work  of  three  decades 
ago ;  for  I  cannot  deny  that  a  pension  list  of  a  hundred 
millions  a  year,  even  though  it  be  kept  up  for  fifty  years, 
were  no  extravagant  price  to  pay  for  the  blessings  of  an 
assured  Union  and  emancipated  labor.  But  he  can  hardly 
expect  me  to  give  him  that  unapproached  and  altogether 
exceptional  rank  among  those  deserving  well  of  the  com- 
munity, implied  in  the  speeches  of  those  who  are  active  in 
promoting  pension  bills  ;  there  are  others  who,  without 
the  stimulus  of  so  exciting  a  motive,  have  served  it  faith- 
fully, and  even  risked  safety  and  life  in  its  behalf.  In 
their  measure,  firemen,  police-officers,  enginemen,  and 
employes  on  the  life-saving  service  might  prefer  a 
modest  though  securely  founded  claim  to  a  similar  largess. 
Perhaps,  if  they  had  a  "  vote  "  known  by  the  name  of 
their  class,  they  might  receive  one ;  who  knows  ?  Nor 
can  I  be  expected  to  see  what  I  have  seen  of  the  petty 
frauds  with  which  the  working  of  our  pension  system  is 
pervaded,  without  feeling  a  little  disgust  at  the  whole 
business — outside  of  the  clear  cases  where  the  pensioner 
has  been  undeniably  maimed  in  the  nation's  service.  It 
is  when  there  is  no  room  for  suspicion  or  misrepresenta- 
tion or  any  form  of  swindling  that  the  pension  it  pays  is 
a  credit  to  the  government — -that  its  list  of  pensioners 
becomes  truly  a  "  Roll  of  Honor." 

GRATUITIES    TO    OWNERS    OF    SILVER    MINES. 

As  experience  has  shown,  our  national  resources  can  be 
very  acceptably  squandered  in  serving  the  silver  "  com- 
bine."    This  coterie  of  exploiters  of  "  American  industry  " 


238         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

is  not  in  any  situation  to  get  a  bounty  out  of  the  custom- 
ary work  of  our  legislators  in  providing  larger  profits  for 
our  capitalists ;  were  an  import  duty  levied  on  silver  or 
silver  ore  it  would  help  them  not  a  whit,  for  we  normally 
export,  after  satisfying  the  entire  home  demand,  a  large 
excess  of  that  metal.  If,  therefore,  these  capitalists  are  to 
have  equal  opportunities  with  others  for  receiving  more 
than  they  earn,  it  must  be  through  the  more  precarious 
channel  of  specially  allotted  bounties  ;  and  since  it  is  nec- 
essary for  all  who  would  use  the  aid  of  our  laws  to 
increase  the  prices  of  their  products  to  win  the  privilege 
by  misrepresentations,  these  beneficiaries  of  legislative 
partiality  must  surpass  all  in  the  vigor  and  boldness  with 
which  they  pervert  the  truth  if  they  would  succeed  in 
wheedling  their  bounty  from  their  victims.  They  are 
quite  equal  to  their  task,  as  their  past  success  and  the 
impudence  of  propositions  they  are  now  making  plainly 
show.  Particularly  when  a  secretary  of  the  nation's 
treasury  is  not  ashamed  to  lend  his  of^cial  influence 
to  their  service,  a  discussion  of  avoidable  government 
expenditure  which  takes  no  account  of  these  worthies 
is  indeed  incomplete. 

If  there  exists  an  enterprise  that  should  be  permitted 
to  stand  on  its  own  bottom,  one  would  naturally  believe  it 
to  be  that  of  production  of  the  so-called  precious  metals. 
Those  so  engaged  are  apt  to  be  persons  of  large  resources, 
to  whom  payments  in  the  way  of  charity  are  inappro- 
priate. Their  earnings  are  usually  suf^cient  to  support 
them,  and  they  are  not  persons  who  have  deserved  extra- 
ordinarily of  their  fellow-citizens  by  any  public  service.  Nor 
is  their  work  one  that  has  any  special  claim  for  encourage- 
ment at  the  expense  of  otherproductive  industries ;  not  only 
is  our  production — of  silver,  at  all  events — in  considerable 
excess  of  home  demands,  but  this  industry  is  of  a  kind  espe- 


''REVENUE  WITH  INCIDENTAL    PROTECTION."      239 

cially  attractive  for  those  prone  to  speculation,  who  form  a 
number  large  enough  to  insure  it  ample  attention.  No  rea- 
son can  be  given  for  especially  favoring  them  with  bounties 
at  the  public  charge,  and  yet  that  purpose  holds  its 
conspicuous  place  among  those  for  which  taxes  are  kept 
high  and  living  kept  dear. 

For  many  readers,  the  fact  that  the  Compulsory  Coin- 
age Act  of  1878  and  its  successor  of  1890  are  essentially 
provisions  granting  a  bounty  to  silver-mine  owners  by 
artificially  increasing  the  demand  for  their  metal,  were 
originally  passed,  and  are  still  kept  on  the  statute-book 
for  that  object,  may  yet  stand  in  need  of  proof.  As  part 
of  the  proof  I  have,  I  may  mention  first,  the  well-known 
greedy  eagerness  of  all  of  the  silver  men,  and  those 
associated  with  them  as  dependents  or  attorne}'s,  in  push- 
ing this  kind  of  legislation.  Next,  the  undeniable  fact 
that  no  such  legislation  was  proposed  until  some  capital- 
ist was  in  a  position  to  make  a  handsome  profit  out  of 
it.  But  principally,  the  hopeless  collapse  of  all  other 
explanations.  The  subject  will  be  more  fully  examined 
in  another  chapter,  where  the  ills  to  be  anticipated  from 
the  "  free  coinage  "  job,  and  the  injury  that  our  insane 
pandering  to  this  worst  and  most  demoralizing  form  of 
protection-grabbing  has  already  done  us,  can  have  more 
nearly  the  degree  of  attention  their  importance  demands. 
But  there  is  another  point  worth  noting  in  this  connec- 
tion :  for  the  sake  of  enabling  the  mine  owners  to  lay  b\- 
(or  support  a  lobby  with)  more  money  than  they  earn, 
the  cost  of  fifty-four  million  ounces  of  silver  per  year  is 
not  the  only  burden  thrown  upon  our  people.  As  has 
been  well  shown,  it  is  in  a  great  degree  because  we  insist 
on  paying  this  gratuity  without  sacrificing  to  it  our 
national  credit,  that  the  large  surplus  in  our  treasury  is 
required.     As  long  as   the  gratuity  is  exacted  and  paid. 


240        ECONOMIC  AND  INDUSTRIAf.   DELUSIONS. 

no  financier  can  fail  to  see  in  it  an  insidious  undermining 
of  the  public  credit,  and  this  credit  is  only  assured  against 
the  cruel  and  unusual  strain  by  the  collection  of  a  large 
sum  in  taxes  otherwise  unnecessary.  Recourse  is  thus 
had  to  one  abuse  in  order  to  maintain  another. 

No  cure  can  be  found  for  this  unhealthy  state  of  the 
national  finances  until  our  people  adopt  the  obvious  ex- 
pedient of  choosing  representatives  who  will  not  put  the 
interests  of  the  silver  beggars  above  those  of  their  own 
constituents.  In  the  meantime  the  Treasury  might  do 
some  little  toward  the  establishment  of  sound  ideas  by 
the  statement  of  truth  in  place  of  fiction  in  its  reports. 
The  fancy  of  many  who  ought  to  have  learned  better  is 
tickled  by  the  statement  that  when  so  many  dollars  cost- 
ing seventy-five  cents  each  have  been  coined,  there  have 
been  so  many  times  twenty-five  cents  "  profits  of  coin- 
age." They  argue  that  it  is  a  right  shrewd  thing  to  make 
so  much  profits,  and  that  we  should  be  shrewder  if  we  made 
more.  In  simple  truth,  the  government  not  only  makes 
no  profit  whatever,  but  can  make  none  except  through 
a  partial  repudiation — certainly  none  while  gold  continues 
to  be  money  in  this  country.  By  recognizing  the  indu- 
bitable fact  that  the  coin  circulates  as  a  dollar  only  because 
the  remaining  twenty-five  cents  are  accepted  as  a  note  for 
which  the  government  has  pledged  payment — has  guar- 
anteed gold  value — the  Treasury  reports  would  become 
sources  of  light  rather  than  of  deeper  darkness.  The 
government  has  in  reality  lost,  and  lost  heavily,  by  its 
coinage  of  silver  dollars  since  1878.  To  bring  it  in  any 
profit,  its  dollars  ought  to  be  worth  more  now  than  they 
were  when  bought.  In  fact,  the  value  of  silver  has  been 
steadily  falling  ;  and  the  defect  of  value  in  each  coin, 
which  the  government  is  bound  to  make  up  or  go  for  so 
much  into  bankruptcy,  has  been  as  steadily  growing. 


''REVENUE  WITH  INCIDENTAL  PROTECTION."      241 
A    COMMON    INJUSTICE    IN     ALL     UNNECESSARY    EXPENDITURE. 

These  six  ways  of  spending  the  public  money  are  not 
equally  bad.  Strong  as  are  my  individual  prepossessions 
against  the  first  of  them,  only  the  last,  perhaps,  is  com- 
pletely indefensible  ;  while  that  preceding  it  (in  liberal 
pensions  to  disabled  veterans)  has  always  proved  particu- 
larly attractive  to  the  most  generous  of  nations.  There 
is  this  resemblance  about  the  whole  group,  however,  in 
addition  to  the  essential  feature  of  calling  for  high  taxa- 
tion, that  all  agree  in  stretching  the  functions  of  the 
national  government  to  a  doubtful  extent.  As  already 
said,  I  am  not  disposed  to  draw  hard-and-fast  lines  as  to 
the  proper  functions  of  government  ;  it  simply  seems  to 
me  advisable  to  be  very  cautious  about  stretching  them. 
Another  point  of  agreement  about  the  various  schemes 
has  even  higher  importance. 

There  is  a  radical,  inherent  injustice  in  levying  taxes 
on  a  part  of  the  community,  the  benefits  of  which  taxes 
are  to  go  to  some  other  part  ;  and  the  claims  of  justice 
in  the  matter  deserve  far  more  attention  than  is  usually 
allowed  them.  If  the  burden  of  the  tariff  were  distrib- 
uted equally,  then  an  expenditure  that  brought  equal 
benefit  to  all  might  be  equitably  based  on  it  ;  but  the 
expenditures  advocated  are  wofully  partial  in  their  dis- 
tribution of  benefits,  while  certainly  the  burdens  are 
most  unequally  distributed.  Everybody  consumes  the 
protected  article,  to  be  sure  ;  but  since  only  a  part  can 
receive  any  benefit  in  increased  prices  for  their  wares, 
the  weight  of  protection  is  really  thrown  on  the  remain- 
ing part.  The  question  to  the  practical  legislator  is  there- 
fore :  Will  the  proposed  expenditures  confer  such  a  pecul- 
iar benefit  on  the  part  of  the  community  whose  income 
is  fixed — or  whose  product  is  exportable,  and  not  increased 

in  price  bv  the  imposition  of  import  duties — that  you  are 
16 


242         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

justified  in  saddling  them  distinctively  upon  it  ?  What 
sort  of  a  reply  could  be  made  to  this  question,  on  behalf 
of  any  of  the  schemes  just  considered  ? 

OTHER     QUALITIES     OF     THE     IDEAL     TARIFF. 

The  vision  of  a  tariff  law  which  shall  gently  wean  the 
American  consumer  from  his  predilection  for  foreign- 
made  goods,  and  by  the  very  same  means  afford  the  gov- 
ernment all  needed  support,  is  not  the  only  fruit  of  that 
impulse  to  seek  in  the  ideal  realm  for  the  mode  of  opera- 
tion of  a  favorite  political  device,  to  which  protection 
owes  the  loyalty  of  its  disinterested  adherents.  It  is  but 
the  most  important  among  many.  The  ability  to  imagine 
a  revenue  scheme  as  working  with  perfect  smoothness 
in  two  opposite  ways  at  the  same  time,  arising  from  a 
confused  observation  how  similar  schemes  work,  some  in 
one  of  the  ways,  some  in  the  other — very  much  as  our 
friends  in  the  olden  time  came  to  imagine  the  centaur — 
is  fully  equal  to  flights  as  lofty  in  other  directions.  With 
the  inspiriting  ring  of  a  beloved  party's  war-cry,  or  of  a 
trusted  leader's  voice,  in  their  bewitched  ears,  few  men 
can  constrain  their  eyes  from  seeing  an  Olympian  glory 
hanging  over  each  individual  plank  of  one  political 
platform,  as  well  as  a  Stygian  blackness  over  the  other. 

It  is  to  just  such  an  idealizing  impulse  that  those  appeal, 
who  lay  stress  on  what  they  are  pleased  to  call  our  "sys- 
tem "  of  protection.  It  is  perfectly  possible,  I  grant,  to 
weave  devices  for  artificially  forcing  industries  into  a  real 
system.  Such  a  system  Colbert  planned  under  the 
"  Grand  Monarque,"  and  with  such  a  system  did  Alex- 
ander Hamilton  aim  to  endow  our  country.  For  this 
purpose  the  resources  of  statesmanship  are  brought  into 
play ;  inquiry  is  made  as  to  the  kinds  of  industry  whose 
presence  in  the  country  may  be  thought  on  any  account 


"REVENUE  WITH  INCIDENTAL  PROTECTION."      243 

advisable,  and  the  amount  of  stimulus  suitable  to  set  it 
into  the  desired  activity  is  apportioned  to  each  ;  the  social 
forces  which  nature  and  natural  freedom  leave  too  wild, 
spontaneous,  and  uncontrolled,  receive  sagacious  guidance 
and  restraint ;  and  all  are  happy  to  acknowledge  the  gov- 
ernment's superior  if  not  unerring  knowledge  of  every 
citizen's  business  interests.  Whether  a  system  of  this 
kind,  granted  practicable,  would  be  good  or  bad  for  us, 
might  undoubtedly  be  an  interesting  subject  to  discuss ; 
but  it  is  enough  for  practical  men  to  see,  clearly,  not  only 
that  the  country  has  no  system  of  the  kind  at  present,  but 
that  such  a  system  is  necessarily  impossible  to  congres- 
sional legislation.  The  construction  of  a  tariff  act  is 
determined  by  influences  of  an  altogether  different  charac- 
ter. The  statesman  who  moves  that  the  country  be 
saddled  with  a  duty  is  very  rarely  one  who  has  considered 
the  remoter  effects  of  it,  but  far  more  generally  one  who 
is  driven  by  the  pressure  of  some  scheming  and  pushing 
constituent  ;  and  the  whole  of  every  tariff  act  is  made 
up  of  elements  of  this  kind.  A  representative  from  the 
Canada  border  wants  duties  on  ordinary  farm  products, 
and  votes  to  maintain  others  in  order  that  these  may  be 
allowed  him  ;  one  from  Northern  Michigan  will  work  the 
same  way  for  protected  ores  ;  one  from  Florida  or  Cali- 
fornia for  oranges  ;  one  from  Pennsylvania  for  a  great 
many  things.  The  demonstration  that  any  general 
national  interest  depends  upon  the  duties  they  advocate, 
would  be  so  far-fetched  and  difficult  that  it  is  hardly  ever 
attempted  in  cases  like  these  ;  the  only  reason  for  desiring 
the  duty  is  that  it  will  help  some  constituent  to  make 
money  faster,  and  that  reason,  embellished  a  little  in  the 
expression  of  it,  is  apt  to  be  the  one  given. 

The    tariff   act    as   passed    through    our   legislature   is 
meide  up  essentially  of   private  schemes  massed  together 


244        ECONOMIC  AND   INDUSTRIAL    /)K/jrS/ONS. 

with  a  view  of  commanding  votes  in  Congress  by  a  sort  of 
"  cohesive  power  of  public  plunder  "  ;  the  same  tariff  act 
in  its  ideal  aspect  presented  for  the  admiration  of  the 
people  who  are  to  vote  in  a  President  and  House  of  Rep- 
resentatives, is  one  of  the  kind  I  have  sketched,  based 
primarily  on  the  ascertained  needs  and  interests  of  the 
people  as  a  whole.  As  easy  a  refutation  of  this  pretty 
theory  as  can  be  found,  is  given  in  one  fact  already  pointed 
out,  the  change  of  attitude  taken  by  the  great  custodians 
of  the  protected  interests,  the  Tribune  et  al.,  when  an  in- 
dustry enjoying  their  favor  turns  its  back  on  the  cause  of 
indiscriminate  protection,  and  seeks  its  prosperity  in  the 
direction  of  cheaper  raw  materials.  Then  the  power  which 
was  ready  yesterday  to  advocate  its  cause  before  the 
people  as  an  enterprise  in  which  all  were  vitally  interested, 
brandishes  to-day  the  vengeance  of  that  very  people  as  a 
rod  over  it,  compelling  it  to  give  that  it  may  receive.  It 
is  the  ideal  protective  system,  wherein  the  wise  and  far- 
seeing  statesman  provides  for  the  general  welfare  by  salu- 
tary regulation  of  industries,  which  the  protected  interests 
parade  before  the  public  ;  it  is  the  practical  protective 
system  which  those  interests  illustrate  in  their  appeals  one 
to  another :  "  If  you  button  up  the  people's  pocket  against 
my  hands  I  shall  see  that  you  cannot  get  into  it  either." 
The  ideal  tariff  "  gives  "  employment,  and  those  who 
portray  it  for  us  are  vivid  enough  in  their  contrasts  of  the 
multitude  who  must  be  reduced  to  idleness  and  thus  to 
beggary  when  some  one  or  two  industries  are  prosecuted 
abroad,  with  the  multitude  who  are  rescued  from  such  ills 
by  the  establishment  of  such  industries  in  our  own 
country.  What  influence  this  picture  ought  to  have  on 
the  reasoning  mind,  I  have  already  sufiflciently  considered, 
but  I  ought  to  set  over  against  it  a  sketch  or  two  drawn 
from  the  working  of  the  tariff  in  reality — ought  to  depict 


"REVENUE  WITH  INCIDENTAL   PROTECTION."      245 

with  equal  vividness  the  workmen  who  are,  as  a  matter  of 
historical  fact,  turned  remorselessly  adrift  by  those  com- 
binations to  limit  production  and  thus  hold  up  prices, 
which  high  protective  duties  are  so  perfectly  adapted  to 
facilitate.  Among  the  first  effects  of  the  McKinley  law, 
we  are  told,  was  the  advantage  taken  of  its  sharp  increase 
in  the  duty  on  carpets,  by  Philadelphia  dealers  :  as  soon 
as  the  enhanced  expense  of  importing  the  competing 
article  assured  them  of  impunity,  they  at  once  shut  up 
half  the  factories  in  the  city,  and  their  workmen  were 
allowed  a  luscious  taste  of  the  bounty  of  protection  in 
"giving"  employment.  The  career  of  every  Trust  has 
been  marked  by  achievements  of  this  kind  :  the  public  is 
forced  by  it  to  pay  as  high  a  price  as  the  producer  dares 
to  ask,  and  the  laborer's  employment  taken  from  him 
whenever  a  restriction  of  production  is  necessary  for  that 
end.  The  essence  of  the  Trust  being  control  of  the  whole 
supply  in  few  hands,  and  the  essence  of  protection  being  a 
restriction  of  competition  to  the  inhabitants  of  one  limited 
area,  the  two  can  be  unfailingly  relied  on  to  work  har- 
moniously together ;  so  that,  in  place  of  the  ideal  increase 
of  industry  through  stimulation,  the  tariff  gives  us  its 
practical  repression  through  Trusts.  The  laborer's  means 
of  subsistence,  as  illustrated  by  experience  under  the  same 
McKinley  law,  can  be  taken  from  him  without  resort  to  a 
formal  Trust  to  limit  production  :  for  the  increased  cost  of 
their  raw  material  has  enforced  a  suspension  in  some 
manufactures  and  a  limited  production  in  others,  more 
than  sufificient  to  counteract  the  stimulation  of  works  to 
which  protection  brought  a  net  balance  of  profit — for 
even  these  have  been  disappointed  of  gains  to  the  meas- 
ure of  their  hopes,  by  a  falling  off  in  the  demand,  due  to 
the  increased  price.  Since  manufacturing  industry  as  a 
whole   appears   to    have    been    more    embarrassed    than 


24C>        ECONOMIC  AND    INDUSTRIAI.    DELUSIONS. 

encouraged  by  the  new  legislation,  there  is  no  sign  of  that 
stimulated  demand  for  labor  which  is  so  well  known  a 
mark  of  the  tariff  of  the  ideal. 

AN  APPEAL  FROM  FANCY  TO  REASON. 

But  why  multiply  illustrations,  when  every  form  of 
delusion  which  these  pages  were  written  to  expose  is  but 
an  instance  of  the  contrast  between  ideal  and  practical  ? 
What  is  it  but  a  substitution  of  a  dream-fabric  for  actual 
experience,  to  expect  of  a  tariff  that  it  will  exert  any 
influence  whatever  in  giving  wares  of  our  production  a 
better  place  in  foreign  markets  than  are  allowed  foreign 
wares  in  our  own  ?  That  it  will  have  any  effect  in  main- 
taining a  specie  supply,  or  in  guarding  against  a  commer- 
cial crisis  ?  That  in  one  of  our  elaborately  devised 
schemes  of  duties  the  protection  afforded  any  product 
will  always  encourage  it,  to  an  extent  beyond  that  to 
which  it  is  discouraged  by  taxation  upon  the  materials 
used  ?  That  the  laborer  will  be  benefited  at  all  by 
protection  of  the  product  on  which  he  is  employed,  at 
the  expense  of  other  production  ?  That  a  home  mar- 
ket will  or  can  be  provided  by  such  agency,  or  that 
whatever  it  is  that  is  provided  will  be  worth  paying  its 
cost  for  ?  Experience,  the  appointed  cure  for  delusions, 
may  be  trusted  to  set  these  to  rights,  wherever  the  true 
interpretation  of  experience  is  found  :  the  inquirer  need 
only  be  on  his  guard  against  accepting  a  partial  presenta- 
tion of  its  facts  for  a  complete  one ;  since  the  inference 
from  one  or  two  facts  cunningly  selected  may  be  quite 
opposite  to  that  fairly  derivable  from  an  examination  of 
all  the  facts  of  experience — I  have  called  attention  to 
such  instances  as  the  fall  in  the  price  of  steel  rails,  and 
the  rate  of  daily  wages  prevailing  in  the  United  States 
and    in    England.      For  all  who  neglect  to  observe  the 


''REVENUE   WITH  INCIDENTAL   PROTECTION."      247 

omission  of  the  price  of  the  rails  elsewhere,  and  to 
remember  that  our  own  and  England,  important  though 
they  are,  are  not  the  only  countries  in  existence,  the 
few  facts  presented  by  the  Protectionist  have  all  the 
effect  of  a  complete  whole,  and  over  their  minds  delusion 
holds  its  sway  undisputed.  Fancy  continues  to  guide 
them,  while  the  lessons  of  fact  pass  by  them  unheeded. 

It  might  not  be  worth  while  to  lay  stress  on  such 
points  as  these,  were  it  not  a  favorite  device  of  many 
Protectionists,  particularly  those  of  the  shallower  sort,  to 
brand  the  student  of  political  economy  and  all  who  listen 
to  him,  as  "  theorists  "  whose  conclusions  are  entitled  to 
no  weight  in  the  practical  concerns  of  life.  The  conceit 
of  ignorance  when  it  parades  itself  as  knowledge,  or  when 
it  exults  in  its  nature  as  ignorance,  and  values  itself  above 
knowledge,  is  often  anything  but  amusing.  It  is  worth 
while,  therefore,  to  be  often  at  the  trouble  of  explaining 
that  to  use  the  intellect  that  God  gave  us  in  the  practical 
affairs  of  life,  without  the  application  of  theory,  is  as  im- 
possible as  walking  without  legs ;  that  the  word  means 
"a  general  view,"  a  perception  of  what  there  is  in  com- 
mon about  any  class  of  facts,  that  no  theory  is  more 
distinctly  theoretical,  for  instance,  than  the  one  by  which 
we  foretell  rain  when  the  sky  looks  threatening,  or  than 
the  other  one  that  ascribes  to  a  substance  which  has  the 
marks  of  beef  a  nutritive  value.  As  I  have  often  discov- 
ered, theory  in  some  other  man  is  principle  in  ourselves  ; 
and  there  can  be  no  doubt  that  the  exalted  perfection  of 
dispensing  with  all  theory — doing  without  general  princi- 
ples, that  is  to  say,  in  mental  operations — is  one  attained 
only  by  those  gifted  individuals  we  know  as  idiots.  No 
one  could  set  a  higher  value  than  I  on  practical  reasoning 
and  practical  men  ;  but  I  cannot  extol  as  practical  what 
is  really  nothing  better  than   short-sighted  :  or  fail  to  see 


24«S         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

that  in  broad  questions  of  national  policy,  the  most  truly 
practical  man  and  the  most  perfect  theorist  are  one  and 
the  same.  It  is  a  curious  illustration  of  inability  to 
understand  the  language  one  uses  when  one  says  that 
"  free  exchanges  will  work  very  well  in  theory  but  will 
not  in  practice,"  without  observing  that  his  general  state- 
ment of  what  will  work  in  practice  is  itself  the  statement 
of  a  theory — of  a  theory,  it  is  worth  while  to  add,  whose 
merit  is  not  at  all  enhanced  by  its  propounder's  pro- 
pensity to  use  catch-phrase  as  a  substitute  for  thought. 
That  the  theoretical  reasoning  fashionable  among  Pro- 
tectionists is  not  free  from  the  vices  and  weaknesses  too 
often  attaching  to  theoretical  reasoning,  the  instances 
given  in  this  chapter  have  sufificiently  shown. 

There  is  a  yet  more  important  justification  for  the  ex- 
amination we  have  just  made.  It  is  exactly  from  the 
many  worthy  people  who  would  look  in  the  picturesque 
region  of  their  imaginings  to  learn  the  working  of  a  tariff 
act,  would  estimate  its  real  by  its  professed  effect,  and 
would  assume  that  it  will  work  just  as  its  active  pro- 
moters said  it  was  going  to  work,  that  those  schemers 
derive  their  power  to  shackle  our  country  with  so  oppres- 
sive a  burden  of  legislation.  To  the  pure  are  many  im- 
pure things  pure ;  and  so  long  as  these  good  souls  are 
contented  not  to  inquire  into  the  sources  from  which  such 
acts  come,  and  the  manner  of  their  construction  ;  not  to 
look  behind  the  veil  of  patriotism  thrown  about  any  one 
of  their  multifarious  provisions,  for  the  grasping  greed 
which  really  dictated  it  ;  not  to  discover,  in  their  cum- 
brous complexity,  the  barter  and  bargain  which  are  ever}-- 
where  cropping  out  through  a  superficial  solicitude  for 
the  country's  varied  interests ;  so  long  is  the  countr}^  in 
danger  of  falling  a  prey  to  some  new  "  tariff  of  abomina- 
tions."    So  long  as  our  estimable   friends  keep  their  eyes 


''REVENUE   WITH  INCIDENTAL   PROTECTIONS      249 

open  to  the  pretty  picture  of  industries  so  stimulated  by 
the  beneficent  intervention  of  government  that  a  few 
years  will  render  them  self-supporting,  and  closed  to  the 
ugly  fact  that  the  demand  for  protection  has  never  known 
any  limit,  in  time  or  amount,  but  the  willingness  of  the 
governing  power  to  accord  it — that  one  hundred  years  of 
it  have  sharpened  and  not  in  the  smallest  degree  satisfied 
that  demand,  and  have  best  succeeded  in  establishing  a 
craven  dependence  instead  of  the  self-reliance  we  ought 
to  find  among  our  productive  industries — as  their  exac- 
tion of  us,  after  all  the  burdens  we  have  already  borne  for 
their  presumed  benefit,  of  this  McKinley  monstrosity  dis- 
tinctly proves, — so  long  will  our  emancipation  remain  more 
difificult,  our  chains  heavier. 

When  these  dreamers  wake,  the  country  is  free  again. 
The  legislator  will  then  look  for  light  no  longer  to  the 
lobby — will  no  longer  plead  the  pressure  of  private  inter- 
ests that  might  be  advanced  by  a  tax,  as  an  excuse  for 
levying  that  tax  ;  but  will  remember  that  his  duty  is  to 
the  people  at  whose  expense  it  is  proposed  to  advance 
the  interest,  and  feel  such  pressure  only  as  a  warning  of 
the  attacks  which  the  people  need  to  be  protected 
against.  Investors  in  business  will  no  longer  look  to 
legislative  bounty  for  opportunity  to  make  profit  on 
their  capital,  but  will  depend  entirely  on  the  rewards 
legitimately  earned  by  service.  Troubles  will  arise — it  is 
not  in  the  power  of  even  so  beneficent  a  reform  as  the 
liberation  of  our  commerce  to  bring  about  a  millennium, — 
but  the  darkest  and  most  threatening  cloud  in  our 
political  sky  will  have  been  dispelled,  when  our  people 
begin  to  be  guided,  through  the  obscurities  and  intricacies 
of  the  tariff,  by  facts  of  experience  rather  than  by  visions 
of  flattering  fancy. 


CHAPTER   IX. 

PROTECTION   AND   AGRICULTURE. 

American  farmers  are  addressed  in  the  two  following  open 
letters.  The  first  of  them,  on  the  McKinley  Bill  at  its  intro- 
duction in  the  House  of  Representatives,  was  published  in  the 
Philadelphia  Record  of  May  17,  1890  ;  was  reprinted  in  some 
of  the  Western  papers,  and  was  quoted  at  length  by  Hon.  Levi 
Maish  of  Pennsylvania,  in  his  speech  against  the  bill  in  the 
House,  October  ist.  It  contains  considerable  repetition  of 
points  already  discussed  in  the  foregoing  chapters,  and  may 
be  accepted  as  being  in  the  main  a  summary  of  those  chapters 
in  more  popular  form,  with  special  application  to  the  farmer's 
calling,  and  to  the  tariff  of  1890.  The  Record  in  alluding  to 
it  editorially  said  : 

"  No  other  newspaper  in  Pennsylvania  approaches  The 
Record  in  the  extent  of  its  circulation,  but,  large  as  it  is,  it  is  a 
very  imperfect  agency  for  reaching  the  eyes  of  the  farmers  of 
the  United  States,  and  it  is  a  matter  of  great  regret  that  a  copy 
of  this  morning's  issue,  containing  an  article  by  Mr.  A.  B. 
Farquhar  on  '  Protection  and  Agriculture,'  should  not  go  into 
the  hand  of  every  one  of  them.  It  is  not  a  partisan  argument. 
Mr.  Farquhar  during  a  greater  part  of  the  time  since  the  birth 
of  the  Republican  party  has  acted  with  that  party.  He  is  one 
of  the  foremost  manufacturers  in  Pennsylvania  whose  business 
intercourse  with  farmers  is  close  and  constant.  His  prosperity 
is  dependent  upon  the  prosperity  of  agriculture.  The  views 
he  has  presented  are  based  upon  an  understanding  of  accepted 
opinion  among  farmers  on  the  tariff  question,  growing  out  of 
years  of  personal  contact  and  continuous  correspondence.  As 
he  shows,  the  tillers  of  the  soil  have  borne  the  brunt  of  pro- 
tective taxation  from  the  outstart,  under  the  delusion  that  they 
were  sharers  in  the  bounty  paid  into  the  pockets  of  manufac- 
turers.    Their  votes  have  kept  the   Protectionists  in  power. 

250 


PROTECTION^  AND   AGRICULTURE.  2%\ 

But,  after  long  and  persistent  experiment,  they  find  them- 
selves impoverished,  the  value  of  their  lands  lessened,  and  the 
prices  of  their  products  decreased.  It  is  no  news  in  any  part 
of  the  country  that  the  farmers  are  profoundly  disturbed,  dis- 
pleased, and  disheartened. 

"  The  trade  of  the  world  is  barter.  To  prevent  barter  by 
taxing  it  is  chiefly  to  hurt  the  farmer,  who,  producing  beyond 
the  capacity  of  home  consumption,  must  look  to  the  foreign 
market  for  the  sale  of  his  surplus,  and  accept  for  his  whole 
ptpduct  the  price  paid  in  the  foreign  market.  Buying  in  a 
market  artificially  rigged  against  him,  and  selling  in  competi- 
tion with  the  whole  world,  the  farmer,  after  thirty  years  of  this 
one-sided  trading,  finds  himself  on  the  edge  of  insolvency. 
Mr.  Farquhar  shows  how  the  farmer  has  fallen  into  the  pro- 
tectionist trap,  and  how  he  may  get  out.  It  will  make  excel- 
lent reading  for  to-day  or  to-morrow  or  the  next  day." 

Open  Letter  to  American  Farmers,  No.   i. 

Will  you  allow  me,  my  farmer  fellow-citizens,  charged 
with  the  most  important  industry  in  a  great  republic,  an 
hour  of  your  serious  attention  ?  You  are  not  suffering  for 
lack  of  advisers  on  this  question  of  protection,  I  am  well 
aware.  Indeed,  you  have  never  been  more  surfeited  than 
now  with  pretended  sympathy.  In  the  elaborate  tariff 
bill  reported  by  Hon.  William  McKinley  from  the  Ways 
and  Means  Committee  of  the  present  House  of  Repre- 
sentatives your  interests  (or  rather  what  he  expected  to 
pass  off  as  your  interests)  have  been  very  deeply  consid- 
ered. The  majority  report  accompanying  the  bill  is  espe- 
cially eloquent  over  your  condition  and  your  claims.  A 
long  letter  has  been  written  by  the  head  of  the  Agricul- 
tural Department,  which  pledges  to  the  support  of  this 
new  measure  the  whole  weight  of  Secretary  Rusk's  official 
position,  past  services,  and  popularity. 

These  are  but  specimens  of  what  is  done  and  said  every 
day.  An  exhaustless  torrent  of  speeches,  editorials,  mag- 
azine articles  and  pamphlets  has  been  unceasingly  poured 


252         ECONOMIC  AMD  INDUSTRIAL    DELUSIONS. 

forth  upon  you  with  the  design  of  overwhchning  your 
reason,  i)ersuading  you  that  the  poHcy  of  imposing  high 
duties  on  imports  is  particularly  beneficial  to  you,  and 
thus  engaging  your  votes  for  men  who  are  trying  to  raise 
them  higher. 

In  the  face  of  this  mass  of  argument,  I  shall  undertake 
to  show  that  those  same  high  duties  are  really  working 
you  a  grievous  injury  ;  that  they  are  largely  the  cause  of 
the  lamentable  depression  in  farming  interests  now  ac- 
knowledged on  every  hand  ;  that  you  have  at  this  hour 
no  more  urgent  demand  upon  your  legislators  than  for 
their  abatement,  and  that  there  is  nothing  but  evil  for 
you  in  the  increase  proposed  by  the  bill.  I  shall  not 
merely  set  assertions  of  my  own  in  opposition  to  the 
assertions  of  the  distinguished  gentlemen  I  have  cited.  I 
hope  to  succeed  in  proving  my  points  by  facts  and  rea- 
soning so  clear  that  they  need  only  be  understood  to 
carry  conviction — and  only  be  examined  to  be  under- 
stood. I  unhesitatingly  take  up  the  gage  of  battle  they 
have  thrown  before  me  ;  you  shall  be  judges  of  the  con- 
test, according  me  nothing  more  than  fair  treatment.  On 
a  question  which  so  closely  concerns  yourselves,  you  may 
be  worse  losers  than  I  if  you  dismiss  me  without  a  patient 
hearing. 

FARMER  AND  FARM-IMPLEMENT    MAKER  UNITED  IN  INTEREST. 

The  burdensome  duty  of  declaring  the  truth  as  I  see  it 
is  one  from  which  I  would  gladly  be  excused  if  I  could. 
But  a  special  responsibility  is  thrown  upon  me  by  two 
circumstances  :  I  happen  to  have  attained  some  degree 
of  business  success,  and  may  therefore  expect  people  to 
listen  to  me  who  would  not  listen  othenvise ;  and  my 
interests  as  a  manufacturer  are  known  to  be  in  every  way 
identical  with  those  of  the  agriculturist.     I  can  make  no 


PROTECTION  AND   AGRICULTURE.  253 

pretensions  to  the  chair  of  the  instructor.  I  never  studied 
political  economy  under  the  professors,  nor  has  the  book 
and  closet  side  of  the  subject  ever  had  so  much  attraction 
for  me  as  the  practical  side,  in  which  I  am  vitally  con- 
cerned ;  and  whatever  importance  may  attach  to  my  views 
is  due  to  their  origin  in  business  experience — in  the  many 
years  of  arduous  toil,  close  application,  vicissitudes  of 
prosperity  and  disaster  that  have  impressed  them  upon  me. 

Since  there  is  no  escape,  in  a  tariff  discussion,  from  the 
suspicion  that  judgment  is  warped  by  private  interests,  it 
is  well  to  bear  in  mind  that,  on  this  point,  I  have  not  an 
interest  in  the  world  that  is  not  yours  also.  The  better 
your  condition,  the  more  of  my  tools  and  machinery  you 
can  buy  ;  and  when  prosperity  fails  you,  it  cannot  abide 
long  with  me.  If  I  want  cheaper  raw  materials  for  my 
manufacture  (and  except  for  these  I  have  never  had  any 
interest  in  the  importing  business)  it  is  not  because  I  hope 
to  keep  the  benefit  all  to  myself ;  competition  looks  after 
that,  and  my  customers  must  share  it  with  me,  whether  I 
will  or  no.  My  feelings  are  with  you,  and  no  less  than 
my  business  interests.  I  have  always  loved  country  life, 
and  can  never  forget  that  I  was  born  a  farmer's  boy. 

My  opinion  of  protection,  it  is  worth  while  to  state,  is 
not  regulated  by  political  predilections.  I  was  an  earnest 
Republican  from  the  foundation  of  the  party  until  long 
after  the  war  issues  were  settled  and  its  mission  was 
finished.  My  place  has  always  been  on  the  side,  of 
freedom.  In  the  earlier  and  better  days  of  the  party  that 
side  was  with  the  Republicans.  I  never  turned  my  back 
on  the  party  till  the  party  turned  its  back  on  freedom — 
and  your  welfare  in  the  same  act.  Do  you  believe  that  it 
is  any  wiser  to  travel  with  a  party  merely  because  it  was 
going  in  the  right  direction  a  few  years  ago  than  to  travel 
on  a  stage-coach  for  the  same  reason  ? 


254        ECONOMIC  AND  INDUSTRIAL  DELUSIONS. 

CAN    WE    ACCUMULATE    MONEY    HY    TAXING    IMPORTS? 

Questions  of  national  economy  are  not  in  reality  so  in- 
tricate as  many  suppose.  They  are  determined  by  the 
same  principles  of  clear  common-sense  which  you  apply 
to  questions  of  private  economy,  and  no  mind  able  to 
meet  all  the  demands  for  foresight  and  contrivance,  that 
have  to  be  met  by  the  successful  farmer,  need  fear  in  the 
least  to  trust  itself  with  the  larger  questions  when  the 
necessary  facts  are  before  it.  You  must  not,  then,  give 
ready  credence  to  the  man  who  is  able  only  to  bewilder 
you  ;  and  you  cannot  be  too  careful  to  have  all  the  facts 
that  bear  upon  a  question  before  yielding  your  decision. 

Mr.  McKinley,  in  one  of  his  speeches  during  the  presi- 
dential campaign,  claimed  for  his  party  in  hindering  the 
importation  of  goods  the  same  merit  that  we  allow  to  the 
head  of  a  household  when  he  prudently  resolves  not  to 
buy  too  much  from  others,  but  save  up  his  capital ;  argu- 
ing that  to  the  nation,  as  to  the  family,  more  saving 
brought  more  strength.  This  passage  looks  at  first  sight 
like  the  very  appeal  to  plain,  practical  common-sense  that 
I  have  been  commending ;  and  the  reason  it  is  not  is  be- 
cause of  the  importance  of  one  or  two  facts  its  conceals. 
If  Mr.  McKinley  had  called  attention  to  one  vital  differ- 
ence between  the  private  citizen's  storing  up  money  in  his 
own  strong-box  by  skill  in  selling  and  economy  in  buying, 
and  the  nation's  trying  to  do  the  same  thing — the  fact, 
namely,  that  additions  to  money  saved  have  no  tendency 
in  the  one  case  to  lessen  the  relative  value  of  previous 
savings,  while  they  have  in  the  other — he  could  not  have 
drawn  the  same  conclusion.  *" 

Perhaps  I  would  better  explain  my  meaning  more 
clearly.  If  one  of  your  neighbors  were  to  save  up  some 
money,  or  have  it  left  to  him,  no  effect  would  be  pro- 
duced on  the  purchasing  power  of  what  you    and  other 


PROTECTJOiV  AND  AGRICULTURE.  255 

people  held — you  could  do  as  much  with  it,  and  prices 
would  not  change.  That  is  because  he  is  only  one  in  a 
multitude.  Suppose  every  man  in  your  community — 
your  whole  township — should  make  a  sudden  gain  in 
wealth,  say  by  the  discovery  of  a  mine,  you  would  notice 
little  difference  in  the  value  of  money  even  then,  for  you 
would  continue  to  trade  with  outsiders.  If  your  trade 
should  by  any  cause  be  confined  to  your  own  neighbor- 
hood you  coCrld  not  fail  to  feel  it.  Let  us  suppose  again 
that  the  supply  of  additional  money  were  to  be  distributed 
over  a  whole  State,  and  that  trade  with  other  States  were 
somehow  cut  off.  Can  there  be  any  doubt  whatever  that 
the  value  of  a  dollar  would  become  very  much  smaller? 
You  may  say  that  prices  would  become  higher,  if  you 
choose— the  two  expressions  mean  exactly  the  same  thing. 
If  you  feel  any  doubt,  have  a  talk  with  some  one  who  was 
in  California  within  the  first  few  years  after  the  rich  gold 
discoveries  in  1848,  when  it  was  practically  an  isolated 
State.  The  precious  metal  was  to  be  had  in  abundance 
by  almost  any  one  with  strength  to  get  it  out ;  but  a  clay 
pipe  cost  twenty-five  cents,  a  drink  of  vile  whiskey  a  dollar, 
and  other  things  in  proportion  ;  so  that  for  every  practical 
purpose  one  dollar  in  our  Eastern  States  had  the  same 
value  as  twenty  or  more  in  the  region  where  so  many  of 
them  were  to  be  had.  Do  you  see  how,  if  Mr.  McKinley's 
policy  really  succeeded  in  bringing  a  good  deal  of  money 
to  this  country,  the  same  results  could  fail  to  follow  ?  The 
last  dollar  brought  here  in  return  for  the  produce  of  our 
hard  labor,  while  it  cost  us  quite  as  much  as  the  first  one, 
would  be  certain  to  be  worth  less  to  us.  Having  to  spend 
it  within  the  country  we  should  find  ourselves  confronted 
with  advanced  prices. 

If  this  result — cheap  money  and  high  prices — does  not 
in  fact   follow  the  enactment   of    laws  of   the  kind   Mr. 


25^        ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

McKinley  advocates  (laws  that  hinder  importation  by 
collecting  duties  on  imported  goods  with  a  view  of 
encouraging  sales  of  our  products  for  money),  you  cannot 
be  at  a  loss  to  tell  the  reason.  It  is  because  those  laws 
do  in  fact  little  or  nothing  to  bring  money  to  the  country. 
That  state  of  things  ought  not  in  any  way  to  surprise  you. 
Suppose,  in  consequence  of  this  legislative  discouragement 
of  importation,  the  foreign  country  to  which  we  sent  our 
goods  should  send  us  a  large  sum  of  gold  in  payment. 
Before  we  did  any  trading  with  that  country  again  we 
should  find  that  two  changes  had  occurred  :  First,  in  con- 
sequence of  the  increased  supply  of  money  with  us,  the 
value  of  a  dollar  had  fallen  off — that  is  to  say,  prices  had 
risen  ;  and  as  the  cost  of  producing  our  goods  rose  we 
could  worse  afford  to  sell  at  the  same  price.  For  the 
second  change,  money  having  become  scarcer  in  the  coun- 
try with  which  we  traded,  its  people  could  worse  afford 
to  buy  our  goods  at  the  same  price.  Is  it  not  perfectly 
plain  that  this  state  of  things  could  not  go  on  veiy  long 
without  putting  a  stop  to  trade  of  this  kind  altogether? 

As  a  matter  of  practical  experience  it  does  not  go  on  long. 
However  high  our  tariffs  are  put,  very  little  of  our  trading 
is  done  for  money.  To  yourselves,  of  course,  when  you 
deliver  wheat  to  a  merchant  who  is  going  to  ship  it  to  Liver- 
pool, and  are  paid  for  it,  or  when  you  buy  a  garment  of 
imported  wool,  foreign  commerce  appears  as  a  cash  trans- 
action ;  but  the  money  given  you  has  not  crossed  the 
ocean,  nor  will  that  paid  by  yourselves  make  the  voyage. 
Could  you  see  how  the  great  importing  and  exporting 
houses  manage  the  actual  business  of  exchange — the 
great  bulk  of  it  by  paper  representing  credit,  only  enough 
specie  being  sent  across  to  pay  the  small  balance,  or  differ- 
ence between  one  side  and  the  other,  usually  less  than 
one  fifteenth  of  the  whole  amount — the  transaction  would 


PROTECTION  AND  AGRICULTURE.  257 

wear  a  different  appearance.  Even  the  fact  that  the  West 
Indies  and  South  American  repubHcs  send  us  from  three 
to  seven  times  as  much  merchandise  as  we  send  them, 
does  not  make  large  shipments  of  money  necessary  ;  for 
we  pay  the  difference  by  drafts  on  London,  where  we 
have  a  large  credit  from  exportations  of  cotton,  beef,  and 
breadstuffs,  while  the  English  square  matters  by  sending 
their  wares  to  the  countries  of  which  we  buy.  As  a  mat- 
ter of  practical  experience,  Mr.  McKinley's  favorite  legis- 
lative devices  have  no  such  effect  as  he  claimed  for  them 
in  his  speech,  and  a  very  little  study  of  the  subject  has 
shown  us  why  they  could  not  have.  The  facts  concealed 
by  him — I  can  hardly  suppose  him  ignorant  of  them — are 
fatal  to  his  claim. 

Two  circumstances  may  sometimes  cause  a  difference 
between  the  total  value  of  merchandise  exported  and  im- 
ported by  a  country  ;  while  they  operate  it  will  not  do  to 
set  down  as  a  firm  and  fixed  law  that  the  two  values  must 
necessarily  be  equal.  Both  are  illustrated  in  the  recent 
history  of  our  own  country.  The  effect  of  the  California 
gold  discoveries  made  itself  felt  after  1849  !  ^""^  ^^^^  tables 
of  our  total  imports  and  exports  show  that  while  there 
was  very  little  difference  between  the  sums  up  to  that 
date — first  one  being  greater,  then  the  other,  without  any 
long  continuance  of  either  condition — the  value  of  im- 
ported goods  began  then  to  be  in  excess,  and  continued 
so  for  a  quarter-century,  through  the  civil  war  and  all  its 
changes,  with  scarcely  an  interruption.  That  is  just  what 
we  ought  to  have  expected  ;  silver  and  gold  are  subject 
like  other  commodities  to  the  law  of  demand  and  supply, 
by  which,  when  we  began  to  produce  a  relative  excess  of 
them,  they  flowed  to  countries  producing  less,  and  were 
replaced  by  goods  which  we  found  it  easier  to  get  in  that 
way  than  to  make  by  our  own  efforts. 
17 


258         ECONOMIC  AND   INDUSTRIAI.   DELUSION!^. 

After  1874  the  balance  turned,  and  down  to  1888  our 
exports  of  merchandise  exceeded  imports  in  value  ;  the 
movement  of  specie,  which  had  in  the  preceding  twenty- 
five  years  been  prevailing  outward,  then  sinking  (except 
during  the  year  or  two  when  we  were  making  large  im- 
portations for  a  fund  to  maintain  resumption)  to  an  even 
balance.  The  change,  like  all  financial  changes,  had  its 
reason  ;  it  appears  to  be  owing  to  increased  investments 
of  British  capital  here,  and  the  interest  we  have  to  pay  on 
them.  The  entire  interest  is  now  estimated  as  high  as 
$100,000,000  a  year,  and  Great  Britain  prefers  to  take  it 
(together  with  as  much  more  which  w'e  have  to  pay  her 
for  transporting  our  goods)  in  merchandise.  That  coun- 
try steadily  imports  a  great  deal  more  than  it  exports,  and 
its  prosperity  is  an  abiding  refutation  of  the  "  balance-of- 
trade  "  superstition.  Not  until  the  hard  times  following 
our  war  had  forced  us  to  give  more  of  our  energies  to  pay- 
ment of  debts  already  incurred  than  to  piling  up  new  ones, 
was  this  effect  of  foreign  investments  with  us  perceptibly 
felt. 

Will  you  please  notice,  before  quitting  these  figures, 
that  there  is  no  shadow^  of  justification  for  connecting  the 
changes  in  them  with  the  changes  in  our  tariff  policy? 
Imports  began  to  be  considerably  in  excess  in  1850,  four 
years  after  the  last  preceding  change  of  the  kind  ;  this 
ceased  and  exports  ran  ahead  in  1875  with  no  change  in 
duties;  the  excess  of  exports  seems  just  now  to  have 
ceased  again  with  no  change ;  if  you  remember  that  the 
years  when  the  tariff  was  changed  were  1842,  1861-69, 
when  its  rates  were  increased  ;  1846,  1857,  1872,  when 
they  were  reduced,  and  1883,  when  the  changes  were  am- 
biguous, you  see  how  totally  unfounded  are  the  claims 
that  high  tariffs  strengthened  us  by  bringing  money  into 
the  country. 


PROTF.CTIOX  AND   AGRICULTURE.  259 

And  yet  those  claims  are  plausible  at  the  first  view. 
Tariffs  look  as  though  constructed  for  that  very  purpose, 
since  they  stop  goods  and  let  money  come  in  free.  The 
case  is  evidently  one  of  those  in  which  a  contrivance  does 
not  work  as  it  was  professedly  intended  to  work.  And, 
that  being  the  case,  telling  people  that  it  is  working  ex- 
actly that  way  does  not  make  it  work  so. 

Yau  have  been  detained  a  good  while  on  this  point,  be- 
cause it  is  a  very  important  one.  A  great  many  glib  and 
persuasive  speakers  found  huge  piles  of  argument  on  the 
pretence  that  high  import  duties  in  some  way  keep  money 
flowing  into  the  country,  when  it  would  not  come  under 
low  duties.  They  support  by  this  pretence  the  fanciful 
connection  which  they  have  conjured  up  between  the  re- 
duction of  duties  and  the  great  financial  distresses  in  1837 
and  1857.  As  there  are  not  many  people  living  who  can 
clearly  remember  how  those  startling  disasters  really  came 
about,  and  as  there  are  a  great  many  people  who  have  not 
learned  about  the  cause  of  them  from  reading,  these 
quacks  can  safely  and  easily  pass  off  any  explanation  of 
their  own  inventing.  Since  the  best  refutation  of  their 
inventions  is  found  in  a  careful  study  of  the  history  of  the 
times  when  the  panics  broke  upon  us,  and  since  the  more 
thorough  the  study  the  more  ridiculous  such  inventions 
are  found,  I  need  only  say  that  those  panics,  like  all 
others — including  the  ones  that  attended  the  great  "  South 
Sea  "  and  "  Mississippi  "  schemes  nearly  two  centuries  ago, 
before  there  was  a  tariff  question,  and  the  terrible  one  be- 
ginning in  1873,  while  we  were  under  a  very  high  tariff — ■ 
had  all  a  single  cause  —  extravagant  speculation  ;  and 
there  is  good  reason  for  the  belief  that  the  speculative 
spirit  which  received  such  a  fearful  rebuke  in  the  disas- 
trous crisis  of  1837  had  been  to  some  extent  stimulated 
by  the  twist  given   to  our  industrial  enterprises  by  the 


26o        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

high  import  duties  enacted  nine  years  before.  Of  course, 
the  only  reason  anybody  could  have  for  supposing  that 
high  duties  could  prevent  commercial  crises  must  be  their 
assumed  tendency  to  bring  in  money,  and  it  is  therefore 
very  proper  for  you  to  know  that  they  do  not  bring  in 
money,  to  any  extent  worth  considering. 

You  may  often  hear  it  claimed  that  the  tariff  does  great 
things  in  the  way  of  giving  employment  to  working  men 
and  increasing  our  industrial  establishment, — claims  which 
you  can  dispose  of  in  the  same  way.  You  can  point  to 
the  results  of  actual  trial,  too.  You  could  not  find  any 
time  when  our  country  enjoyed  free  trade,  to  be  sure, 
but  you  could  go  back  to  a  time  when  our  import  duties 
were  upon  a  revenue  basis,  and  very  much  lower  than 
they  now  are.  Just  before  the  war,  when  duties  were 
lowest,  and  when  agriculture  was  enjoying  its  most  rapid 
development,  there  was  not  only  no  lack  of  industrial 
enterprise,  but  manufactures  were  fast  increasing;  faster 
proportionately  than  they  now  are.  The  laboring  man 
was  not  forgotten  ;  the  superiority  in  his  condition  (in  the 
free  States)  over  what  Europe  could  show,  was  more 
marked  than  it  has  since  been.  Although  this  country 
has  progressed,  along  with  all  the  rest  of  the  world,  in  the 
improvements  of  the  last  thirty  years  ;  although  we  offer, 
even  now,  a  better  home  for  the  workingman  than  any 
European  country,  it  cannot  be  denied  that  the  change 
for  the  better  has  been  more  visible  within  the  past  thirty 
years  in  England  than  here.  We  have  made  progress,  I 
dare  say,  and  yet  I  cannot  help  pointing  out  that  it  is 
within  that  time  that  we  have  become  accustomed  to  the 
unwelcome  visitation  of  tramps,  not  known  among  us 
before ;  and  that  England  can  point,  as  one  of  the 
accompaniments  of  her  forty  years  of  a  free-trade  policy, 
to  a  proportion  of  her  inhabitants  obtaining  relief  as 
paupers,  of  one  to  twenty-three  at  the  beginning,  to  one 


PROTECTION  AND  AGRICULTURE.  26 1 

to  forty-one  at  the  end.  Our  States  can  show  no  such 
change  for  the  better  in  forty  years.  The  change  in 
many  of  them  is  the  other  way. 

EXPORTATIONS    DIMINISH    ALONG    WITH     IMPORTATIONS. 

The  principle  to  which  I  have  tried  to  call  your  atten- 
tion, that  tJiere  is  very  little  inovevient  in  gold  and  silver 
when  different  eountries  trade  with  each  other^  except  in 
obedience  to  a  special  demand  for  gold  or  silver  (from  a 
country  that  produces  more  of  them,  for  instance,  to  one 
that  produces  less),  and  that  the  great  bulk  of  goods  sent 
out  are  paid  for  by  the  goods  sent  in,  is  invariably  disre- 
garded by  the  Protectionists,  despite  its  importance.  The 
practical  proof  of  this  principle  you  have  seen  in  the  small 
proportion  which  specie  bears  to  merchandise  in  total 
import  and  export  valuation,  as  shown  by  the  tables  of 
the  Statistical  Bureau  of  our  National  Treasury.  Please 
attend,  now,  to  a  new  point.  If  this  principle  is  true, 
another  one  must  be  just  as  true.  Whatever  checks  or 
interferes  with  the  importation  of  goods  must  to  the  same 
extent  cheek  or  interfere  with  exportation.  This  is  by  no 
means  evident  at  first  glance.  We  let  goods  go  out 
freely — even  encourage  them  to  go, — and  block  their 
coming  in  with  taxes.  Suppose  we  reversed  this  policy, 
and  admitted  foreign  goods  free,  while  taxing  our  exports. 
It  seems  a  little  strange  to  say  that  the  effect  of  two 
policies  so  very  different  must  be  in  a  general  way  the 
same,  and  yet  there  can  be  no  rational  doubt  of  the  fact. 
Prices  would  be  lower  in  the  country  taxing  its  exports ; 
the  same  piece  of  money  would  buy  more  there  ;  but 
there  need  be  no  other  perceptible  and  no  practical  differ- 
ence. In  either  case  the  xalue  of  exports  would  bear 
about  the  same  proportion  to  that  of  imports ;  something 
near  equality,  but  neither  so  large  as  it  would  be  with 
trade  unimpeded.     The  effect  is  a  good   deal   that  of  the 


262         ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

rubber  or  brake  on  your  wagon  wheel  ;  it  makes  no  differ- 
ence whether  you  apply  it  to  the  side  of  the  wheel  that  is 
going  down  or  to  the  side  that  is  coming  up  ;  what  is  done 
in  either  case  is  only  to  clog  the  wheel.  You  know  that 
our  tariff  checks  and  interferes  with  importations ;  it  is 
imposed  with  that  very  object.  You  know,  too,  that 
agricultural  productions  are  by  far  our  most  important 
exports,  and  depend  for  a  considerable  part  of  their  total 
sale  on  consumption  abroad.  Is  it  not  well  worth  while 
to  think  a  little  and  see  how  your  access  to  your  market 
abroad  is  checked  and  interfered  with  by  the  same  agency 
that  checks  and  interferes  with  importations  ? 

That  such  interfererice  exists  there  can  be  no  question. 
There  are  two  possible  causes  from  which  it  could  come  : 
your  foreign  customers  might  be  made  less  disposed  to 
buy,  or  you  less  disposed  to  sell  to  them.  I  do  not  see 
how  our  tariff  could  deter  the  foreigner  from  buying  ;  and 
if  it  discourages  you  from  selling,  it  must  be  by  increasing 
the  cost  of  production,  by  decreasing  the  price  you  get, 
or,  perhaps,  by  furnishing  a  new  consumer  in  place  of  the 
one  lost.  It  is  plain  that  while  either  of  the  first  two 
effects  must  be  injurious  to  your  business,  the  last-named 
effect  is  not ;  and  for  that  reason  you  hear  nothing  from 
protectionist  orators  of  any  effect  but  the  last,  which  is 
always  inflated  and  exaggerated  past  all  recognition,  not- 
withstanding the  fact  that  we  are  without  proof  that  it 
has  any  real  existence,  and  ha\'e  a  good  deal  of  proof  of 
the  other  effects.  Have  patience,  now,  while  I  set  before 
you  as  many  as  I  can  of  my  reasons  for  making  so  bold  a 
statement. 

DO    IMPORT    DUTIES    GIVE     US    A    HOME    MARKET  ? 

Do  high  taxes  on  imported  goods  have  the  effect  of  pro- 
viding new  customers  at  home  who  replace  the  foreigners 


PROTECTION  AND   AGRICULTURE.  263 

to  whom  you  would  sell  otherwise  ?  Many  people  believe 
so,  and  that  is  what  is  meant  b)^  the  "  home-market  "  cry 
that  is  so  loudly  dinned  in  your  ears  before  every  election. 
It  is  perfectly  true  that,  where  other  things  are  exactly 
equal,  you  can  more  profitably  provide  for  customers 
close  by  than  for  customers  across  the  ocean  ;  and  it  is 
true  that  any  device  for  bringing  customers  close  to  you, 
if  it  does  not  at  the  same  time  injure  you  in  some  other 
way,  works  in  your  interest  ;  but  it  is  quite  untrue  that 
these  facts  have  any  bearing  upon  the  tariff  question. 
For  it  is  untrue  that  other  things  are  exactly  equal — that 
you  are  suffering  no  injuries  from  the  protective  system — 
and  it  is  untrue  that  that  system  has  any  considerable 
effect  in  bringing  customers  of  farm  products  close  to 
your  farms. 

In  the  first  place,  it  has  no  such  power  to  stimulate 
manufacturing  as  people  claim  for  it.  I  am  not  denying 
that  if  there  were  but  one  duty  levied,  on  one  particular 
article  of  manufacture,  the  production  of  that  article 
might  be  very  much  increased  in  this  country,  or  that  the 
production  of  some  articles  may  be  stimulated  as  things 
are  now  ;  but  I  am  claiming  that,  in  the  enormous  multi- 
plicity of  our  protective  duties,  so  many  of  them  operate 
to  harass,  obstruct,  and  injure  other  manufacturing  enter- 
prises while  advancing  a  few  favored  ones,  that  the 
whole  effect  of  the  system  is  less  beneficial  than  detri- 
mental ;  to  manufacturers  along  with  the  rest  of  the  coun- 
try. This  may  sound  strange  to  you  who  have  so  long- 
been  accustomed  to  hearing  this  huge  and  complicated 
scheme  of  duties  spoken  of  as  though  absolutely  essential 
to  the  carrying  on  of  manufacturing;  but  I  think  you 
will  be  ready  to  see,  on  examining  it,  the  reason  for  it. 

Many  manufacturers — myself  among  the  number — 
ever)'  year  export  large  amounts  of    goods,   in  the  face 


264         ECONOMIC  AND   INDUSTRIAL   JJELf SIGNS. 

of  the  world's  competition  ;  and  no  sophist,  I  think,  is 
quite  clever  enough  to  persuade  you  that  we  can  com- 
pete with  foreign  manufacturers  abroad  without  any 
point  in  our  favor,  and  yet  cannot  compete  at  home 
unprotected,  where  we  have  all  the  advantages  of  near- 
ness to  the  consumer,  ability  to  study  his  wants,  and 
lower  freights  to  pay.  So  that  none  of  us  making  goods 
for  export  needs  any  help  from  the  tariff ;  and,  more 
than  that,  there  is  not  one  of  us  to  whom  it  is  not  a 
great  deal  in  the  way.  To  find  how  much  of  our  manu- 
facturing is  in  that  condition,  see  the  number  of  manu- 
factured articles  on  which  there  is  a  steady  export  trade. 
Besides  agricultural  implements,  there  are  sewing-ma- 
chines and  clocks,  engines  and  dredging  machinery,  and 
saws  and  axes  ;  flour  and  vegetable  oils,  of  course,  and 
some  boots  and  shoes,  and  unbleached  cotton  goods. 
That  makes  a  considerable  list  (which  might  be  greatly 
extended)  of  manufacturing  enterprises  that  are  more  hurt 
than  helped  by  protection ;  so  that  when  you  come  to 
count  up  the  aggregate  effect  the  balance  leans  to  the 
unfavorable  side.  If  you  wish  a  test  by  figures,  compare 
the  growth  of  our  manufactures  between  1850  and  i860, 
ten  years  of  low  tariffs,  during  which  the  value  nearly 
doubled,  with  that  between  1870  and  1880,  ten  years  of 
very  high  tariffs,  when  the  total  value  produced  (allowance 
being  made  for  the  fact  that  all  the  values  of  the  1870 
census  were  given  in  8o-cent  dollars)  increased  hardly  60 
per  cent.  I  need  not  tell  you  that  if  the  duties  were  as 
necessary  to  success  in  manufacturing  as  their  advocates 
pretend,  our  rate  of  growth  ought  to  have  been  greater, 
instead  of  less,  when  those  duties  were  higher.  If,  there-' 
fore,  you  are  benefited  by  having  manufactures  estab- 
lished in  this  countr}',  it  does  not  at  all  follow  that  you 
ought  to  keep   the   tariff  high.     You  get  quite  as  much 


PROTECTION'  AND   AGRICULTUKK.  265 

benefit  from  the  prosperity  of  those  manufactures  to 
which  it  is  a  drag  and  a  nuisance  as  from  those  which  are 
helped  by  it. 

Why,  then,  you  will  ask,  are  so  many  manufacturers 
of  the  very  goods  I  have  been  speaking  of — farm  im- 
plements and  other  exportable  goods — among  the  loud- 
est clamorers  for  protection  ?  For  two  reasons,  neither, 
I  am  sorry  to  say,  very  creditable  to  them.  One  is  an 
application  of  the  homely  but  uncontested  principle  that 
"  No  calf  ever  weaned  itself."  They  have  been  taught 
so  to  depend  on  legislative  milk  that  they  do  not  them- 
selves see  that  growth  is  possible  on  other  food.  It 
costs  something,  moreover,  as  I  know  from  my  personal 
experience,  for  a  manufacturer  to  turn,  or  to  look  as 
though  he  were  turning,  against  his  profession.  The 
other  reason  is  that  the  duties  enable  and  encourage 
manufacturers,  by  combining,  to  extort  higher  prices  from 
home  than  from  foreign  customers.  In  the  case  of  wood- 
screws,  of  sewing-machines,  and  some  other  goods,  the 
abuse  is  a  quite  flagrant  one,  the  price  charged  you  being 
nearly  that  paid  by  the  foreigner  for  the  same  goods,  with 
the  large  duty  added.  In  that  of  most  agricultural  im- 
plements the  difference  is  small,  ten  per  cent,  or  less. 
Some  combination  is  necessary  to  enable  manufacturers 
to  play  this  game  ;  but  it  need  not  be  anything  so  elabo- 
rate as  a  Trust,  when  a  simple  trade  understanding  will  in 
most  cases  sufifice.  For  my  part  I  abhor  this  parasitic 
plan  for  deriving  profits  ;*and  I  cannot  believe  that  you 
will  continue,  now  that  your  attention  is  turned  to  the 
matter,  to  encourage  any  manufacturers  in  pursuing  a 
course  at  the  same  time  so  disastrous  to  you  and  so  de- 
moralizing to  them. 

The  point  I  have  just  made  would  be  quite  sufficient 
to    settle    the    home-market  (juestion,     but    there    is    an- 


266         ECONOMIC  AND    INDUSTRIAL   DELUSIONS. 

other  one  quite  as  strong.  The  easy  assumption  of  the 
Protectionists  that — supposing  for  a  moment  we  grant 
their  unfounded  claims  about  the  manufactures  "  estab- 
lished "  by  their  invention — they  thus  bring  customers 
close  to  you,  is  altogether  false.  I  might  safely  ask  nine- 
teen out  of  twenty  of  you— perhaps  forty-nine  out  of 
fifty — what  chance  there  is  of  building  a  factory  within 
easy  hauling  distance  of  your  own  farms,  however  great 
the  stimulation  given  to  manufacturing  in  this  country? 
How  many  of  you  live  near  the  great  lines  of  commerce, 
indispensable  to  manufacturing  success?  Could  not  a 
great  many  of  you  tell  the  old  but  ever-new  story  of 
some  capitalist,  of  more  enterprise  than  shrewdness,  who 
has  tried  to  start  some  kind  of  factory  in  your  neighbor- 
hood, but  has  failed  because  he  found  the  location  un- 
suitable ?  You  may  be  very  certain  that  a  stimulus  to 
manufactures  can  stimulate  them  only  where  they  exist 
— may  start  a  new  mill  or  two  along  the  New  England 
streams,  or  near  the  Pennsylvania  coal-fields  ;  but,  though 
protection  were  piled  up  to  200  per  cent.,  and  exports 
cut  off  along  with  imports,  they  would  not  penetrate  the 
farming  regions  of  Nebraska  and  Iowa  and  Kansas.  What 
good,  then,  is  the  system  to  farmers  there  located  ?  They 
probably  share  in  the  general  patriotic  satisfaction  that 
our  country  has  the  manufactures,  but  not  sufficiently 
to  have  the  cost  thrown  upon  them ;  for,  as  a  matter  of 
simple  business,  a  factory  in  New  England  or  one  of  the 
less  accessible  parts  of  Pennsylvania  is  no  more  to  them 
than  one  in  Glasgow  or  Liverpool.  In  fact,  so  cheap  are 
ocean  freights  that  Liverpool  mght  easily  be  the  more 
advantageous  to  the  Western  farmer  as  a  place  to  have 
his  customer,  because  the  cheaper  place  to  ship  grain  to. 
Since  it  costs  less  to  take  a  parcel  from  a  New  York 
dock  and  land   it  ten  thousand  miles  away  in  Calcutta  or 


PROTECTION  AND  AGRICULTURE.  267 

Melbourne,  than  it  costs  to  haul  the  same  parcel  twenty 
miles  over  a  country  road,  you  see  that  mere  distance 
does  not  make  a  dear  market. 

So  much  for  the  home-market  argument,  which  you 
will  own  that  I  have  treated  with  great  forbearance, 
when  you  realize  that  it  is  essentially  a  juggler's  trick 
and  nothing  more.  The  trick  consists  in  proving  it  ad- 
vantageous to  the  producer  to  sell  at  the  market  he  can 
most  easily  reach — the  one  to  which  transportation  is 
cheapest,  that  is — and  then  pretending  that  it  has  been 
proved  advantageous  to  sell  in  a  market  over  which  our 
national  flag  waves,  rather  than  one  that  happens  to  be 
under  another  government.  This  trick  requires  nothing 
further  to  expose  it  than  the  simple  consideration  :  No 
legislation  is  needed  to  Jmrry  yon  from,  a  ivorse  market  to  a 
better  one.  What  is  sought  from  compulsory  legislation 
can  only  be  to  drive  you  from  the  better  to  the  worse. 
The  market  which  such  legislation  provides,  I  think  I 
have  proved,  would  not  be  worth  keeping  up  a  protec- 
tive system  for,  even  if  it  cost  you  nothing.  As  I  shall 
now  try  to  prove,  its  cost  is  far  indeed  from  being  negli- 
gible as  an  airy  trifle. 

HOW    FOREIGN    SALES    ARE    RESTRICTED. 

Your  sales  to  foreign  buyers  might  be  cut  down,  I 
reminded  you  a  little  while  ago,  in  three  ways  ;  and  I 
have  considered  the  only  one  of  those  ways  in  which 
that  cutting  down  would  not  be  injurious  to  you.  The 
other  ways,  you  remember,  were  by  increasing  the  cost  of 
production  and  by  diminishing  the  price  your  produce 
brought  you.  It  is  not  worth  while  to  separate  these. 
To  save  discussion  I  will  admit  at  once  that  the  price 
which  agricultural  produce  brings  in  English  markets 
would  not  be  sensibly  increased  in  money  by  the  removal 


268         ECONOMIC  AND    INDUSTRIAL   DELUSIONS. 

of  our  restrictions  on  trade  ;  but  that  is  not  the  most  im- 
portant thing  you  have  to  consider.  A  dollar  in  a  place 
where  everything  costs  double  is  worth  no  more  than  50 
cents  to  its  possessor;  and  you  will  easily  see  that  if  pro- 
tection raises  all  prices  above  the  level  they  would  other- 
wise maintain,  it  effects  a  practical  lowering  of  your  price 
by  decreasing  the  amount  that  you  can  do  with  the  same 
money.  So  that  this  question,  along  with  that  of  the 
cost  of  your  tools  and  supplies,  depends  on  this  other: 
are  prices  of  necessaries  higher  because  of  the  protective 
tariff  ? 

How  this  question  can  be  any  question  at  all,  I  find  it 
difficult  to  see.  You  cannot  yourselves  do  very  much  at 
travelling,  I  am  afraid ;  but  to  few  of  you  can  it  be 
unknown  that  people  never  make  large  purchases  of 
clothing  before  sailing  for  Europe,  while  they  are  pretty 
sure  to  bring  a  great  many  new  clothes  back  with  them. 
The  difference  in  price  does  not  extend  to  all  necessaries ; 
such  provisions  as  are  raised  upon  your  own  farms  are 
nowhere,  I  dare  say,  to  be  had  at  lower  prices  than  those 
you  must  be  content  with.  But  cutlery  and  other  iron- 
ware, as  well  as  silk  goods,  are  very  much  lower  in  Eng- 
land, while  almost  anything  of  wool  is,  quality  considered, 
hardly  above  half  price.  I  have  the  best  reason  and  the 
strongest  desire  to  uphold  the  credit  of  American  manu- 
facturing, and  I  know  that  many  of  our  products — agricul- 
tural machinery  particularly — are  better  than  can  be  made 
anywhere  on  the  globe  ;  but  when  I  look  at  woollens  I  am 
a  little  mortified.  It  is  not  pleasant  to  contemplate  the 
worsted  or  shoddy  fabrics  that  are  made  here  and  compare 
them  with  the  fine  durable  articles  at  a  lower  price  that  are 
to  be  had  in  England  and  France.  That  there  would  be 
no  such  difference  in  prices  were  it  not  for  our  tariff  I 
need  hardly  assure  you.     Ocean  carriage  of  such  goods  as 


PROTECTION  AND   AGRICULTURE.  269 

clothing  is  not  expensive,  and  there  is  nothing  else  that 
could  keep  our  price  and  theirs  apart.  Whenever,  there- 
fore, you  are  purchasers  of  woollen  goods,  you  feel  your 
profits  diminished  by  our  tariff  laws — by  the  duties  on 
woollens  and  raw  wool.  You  must  now  take  100  bushels 
of  corn  to  buy  your  suit  of  Sunday  clothes,  while  50 
bushels  would  buy  as  good  a  suit  had  we  no  tariff. 
Whenever  you  buy  a  tool  of  any  sort  you  feel  your  cost 
of  production  increased  by  the  higher  price  we  are  obliged 
to  put  upon  it — higher  because  of  the  duties  on  iron, 
iron  ore,  timber,  paint  and  other  items.  And  it  is  pre- 
cisely by  producing  these  effects  that  the  tariff  system 
operates  to  discourage  the  production  of  goods  for  ex- 
portation ;  in  this  way  is  the  balance  of  trade  held  even, 
and  thus  does  the  repression  of  imports  throw  a  burden 
on  every  producer  of  goods  that  can  be  sold  abroad. 

PRETENCE    THAT    THE    DUTY    IS    PAID    BY    THE    FOREIGNER. 

It  is  one  of  the  inevitables  that  there  should  be  strenu- 
ous efforts  to  break  the  force  of  these  conclusions ;  an- 
other, that  those  efforts  should  meet  with  some  success. 
For  it  is  a  well-known  fact  that  a  theory  has  only  to 
bring  in  some  money  to  some  class  of  men  in  order  to  find 
earnest  defenders,  howev^er  opposed  it  may  be  to  common 
knowledge  and  to  common  sense  ;  and  another,  that  a  doc- 
trine needs  only  to  be  taught  confidently  and  emphatically 
enough  in  order  to  find  adherents.  Let  us  see,  then, 
what  the  tariff  advocates  have  to  say  for  themselves. 
Accordingly,  we  find  them  one  and  all  insisting,  as  though 
it  were  an  established  and  certain  truth,  on  the  view  that 
the  duty  is  something  paid  by  the  foreign  producer,  in 
order  to  secure  for  his  goods  admission  into  our  markets. 
This  being  assumed,  a  great  deal  else  very  easily  follows. 


270         ECONOMIC  AND    INDUSTRIAL    DEIA'SIONS. 

Mr.  McKinley,  for  instance,  in  the  campaign  speech  I  have 
already  noticed,  dwelt  longer  on  this  point  than  any 
other.  His  opponents  were  "  in  the  service  of  foreigners," 
seeking  to  have  them  relieved  of  this  payment ;  he  him- 
self, like  the  ardent  patriot  he  was,  insisted  that  the  for- 
eigners must  pay  it.  "  How  absurd  in  us  to  pay  our 
taxes  when  here  was  a  way  in  which  the  foreigner  could 
be  made  to  pay  them  for  us."  "  How  unjust,  too,  to 
take  a  loyal  citizen  of  our  country,  who  has  borne  all  the 
obligations  of  a  citizen,  and  leave  him  only  the  same 
show  in  the  market  that  was  allowed  an  alien  who  bore 
none  of  those  obligations."  And  so  on,  and  so  on.  It  is 
easy  to  build  up  a  towering  edifice  when  the  foundation  is 
granted  ;  but  the  whole  structure  collapses  when  once 
the  foundation  is  knocked  from  under — when  once  it  is 
settled  that  the  import  tax  is  a  charge  on  the  goods,  and 
that  if  the  foreigner  pays  it  to  get  them  admitted  he 
always  takes  th-e  best  of  care  to  get  it  back  out  of  the 
user  of  his  goods. 

The  fact  that  the  great  mass  of  articles  protected  in 
this  country  are  more  costly  here  than  they  are  in  Great 
Britain,  is  one  proof  of  this.  Second,  the  fact  that  the 
explanation  so  comforting  to  Mr.  McKinley  was  one  that 
never  occurred  to  any  one  in  the  earlier  days  of  tariff 
agitation,  is  quite  suggestive.  The  invention  of  this  ex- 
planation (that  it  was  the  foreigner  who  finally  paid  the 
duty)  evidently  awaited  the  day  when  people  had  for- 
gotten what  prices  used  to  be  before  the  duty  was 
imposed.  A  third  proof  is  in  the  common  sense  of  the 
thing.  Suppose  that  some  foreigner  pays  $1  duty  on  an 
article  and  sells  it  here  for  $4,  is  it  probable  that  he 
would  sell  it  for  $4  or  for  $3  if  there  were  no  duty  ?  His 
profits  on  sales  here  cannot  be  very  different  from  what 
they  are  at  home,  either  higher  or  lower  (as  a  general 


PROTECTION  AND   AGRICULTURE.  27 1 

rule),  for  be  has  competitors,  and  the  one  who  got  hold  of 
the  more  profitable  trade  would  finally  drive  the  others 
out ;  so  that  $3  must  be  his  price  at  home.  Again,  but 
for  the  duty  he  could  not  charge  a  much  higher  price 
here  than  at  home,  for  fear  that  you  might  take  to  buying 
of  his  home  customers  instead  of  himself  directly.  Mani- 
festly, then,  the  same  $3  would  be  his  price  to  you  if  there 
were  no  duty,  and  it  is  hardly  worth  while  to  bother 
about  who  it  is  that  pays  the  duty  at  first,  so  long  as  we 
know  that  it  is  lumped  with  the  price  of  the  article  in  the 
end.  I  know  very  well  that  this  reasoning  does  not 
apply  when  the  producer  holds  a  monopoly,  or  when  this 
country  contains  the  only  consumers,  or  when  the  demand 
elsewhere,  or  the  supply,  is  very  limited,  but  it  does 
apply  to  the  great  mass  of  articles. 

If  a  fourth  proof  is  desired,  you  have  it  in  the  necessary 
conditions  of  protection.  The  producer  in  this  country  is 
only  protected  when  the  sales  of  competing  foreign  articles 
are  diminished.  For  this  purpose  either  buyer  or  foreign 
seller  must  be  obstructed.  Now,  if  the  foreign  producer 
pays  the  tax  our  buyers  are  certainly  not  at  all  obstructed  ; 
and  if  he  finds  profit  in  selling  a  few  articles  and  paying 
the  duty  on  them,  he  would  certainly  find  no  less  in  a 
greater  number  of  sales.  In  fact,  as  any  manufacturer 
will  tell  you,  it  is  only  by  very  largely  increasing  his  sales 
that  he  can  pay  his  way  at  all  when  profits  are  low.  Do 
you  not  plainly  see,  then,  that  if  the  duty  is  paid  by  the 
foreigner  there  is  nothing  to  make  him  sell,  or  us  buy, 
fewer  articles — no  protection  possible  ?  Put  the  rate  high 
enough  to  stop  all  importations,  and  of  course  you  have 
protection  complete.  Short  of  that,  it  is  only  because  the 
charge  is  thrown  on  the  buyer,  because  it  is  he  that  is 
obstructed  from  making  the  purchase,  that  protection 
protects. 


2/2         KCOXOMiC  AND   INDUSTRIAL    DELL  SIGNS. 

My  favorite  demonstration  that  the  final  cost  of  a  duty 
is  thrown  in  the  end  on  the  consumer  of  the  taxed  article 
is  found,  1  confess,  in  the  course  of  the  Protectionist  legis- 
lators themselves.  A  disaster  occurs  sometimes;  Portland 
or  Chicago  is  swept  by  fire,  or  some  prairie  town  succumbs 
to  a  tornado.  As  a  measure  of  relief  it  is  proposed  and 
carried  through  a  Protectionist  Congress  that  materials  for 
the  rebuilding  of  the  unfortunate  town  shall  be  admitted 
free  of  duty.  Why  is  that  ?  Why  does  not  the  states- 
man in  Congress  send  word  back  that  the  proposed  re- 
mission will  have  no  effect  except  to  relieve  foreign  lum- 
ber-men of  what  they  have  to  pay  to  gain  admission  to 
our  markets  ?  Would  he  not  say  so  if  he  dared — if  he  did 
not  know  that  at  such  times  the  people  are  not  to 
be  deluded  ? 

Every  revenue  bill  that  has  been  introduced — certainly 
since  the  era  of  war  tariffs — has  contained  provisions  for 
what  are  known  as  "  compensating  duties."  Examples  of 
these  are  seen  in  woollen  goods,  which  are  protected  by 
the  curious  rate  of  so  much  per  cent,  ad  valorem,  and  so 
much  per  pound  in  addition.  The  reason  assigned  for 
this  provision — and  no  other  explanation,  be  assured,  has 
ever  been  given  for  it — is  that  the  first  part  is  the  suitable 
protection  for  the  goods,  and  the  second  is  the  "  compen- 
sation "  for  the  duty  on  raw  wool.  This  is  only  one 
among  many  duties  of  this  "  compensating "'  class ;  the 
manufacturer  has  always  insisted  on  higher  rates  because 
of  the  duties  levied  on  his  raw  materials.  The  facts  about 
these  duties  have  been  often  set  before  the  public,  and 
this  explanation  has  never,  I  believe,  been  contradicted. 
Did  you  ever  ask  the  question  why  it  is  that  those  manu- 
facturers need  "  compensation  "  ?  They  do  not  need  it 
because  of  anything  that  the  foreigner  has  to  pay  for  get- 
ting his  goods  into  our  markets,  you  may  be  very  certain. 


PROTECTION  AND   AGRICULTURE.  273 

Every  Congressman  who  votes  for  such  a  compensating 
duty,  as  all  Protectionist  Congressmen  always  do,  ac- 
knowledges by  that  very  vote  that  the  duty  is  a  charge  on 
the  purchaser  of  the  goods,  the  price  of  which  is  made 
higher  by  the  amount  of  the  duty. 

The  way  Protectionists  hang  together  is  itself  a  demon- 
stration. The  statesman  who  is  interested  in  getting  one 
article  taxed  is  bound  by  the  strongest  incentives  to  vote 
for  taxing  a  great  many  other  articles  in  which  other  mem- 
bers are  interested,  and  tariff  bills  are  always  carried  by 
log-rolling — each  representative  voting  for  the  favorite 
jobs  of  the  others  in  order  to  carry  through  his  own.  It 
is  well  known  to  every  Congressman  in  charge  of  a  job  to 
benefit  some  influential  constituent  at  your  expense,  that 
he  will  fail  to  carry  it  if  he  does  not  stand  in  with  the 
other  fellows.  Have  you  any  idea  that  he  would  feel  this 
apprehension,  if  he  believed  that  his  scheme  would  throw 
no  additional  burden  on  the  country  ?  If  the  bit  of  pro- 
tection he  seeks  is  going  to  be  a  general  benefit  without 
general  cost,  he  could  have  it  without  buying  it. 

I  have  not  space  to  consider  all  of  the  reasons  brought 
to  prove  that  the  burden  of  protection  is  thrown  upon  the 
foreigners.  Here  are  two  that  are  used  as  often  as  any. 
First,  certain  manufactured  articles,  steel  rails  for  instance, 
have  been  highly  protected,  and  have  greatly  fallen  in 
price.  It  is  claimed  that  protection  did  this,  but  if  those 
who  make  the  claim  would  only  furnish,  along  with  their 
list  of  prices  in  this  country,  the  prices  in  England  at  the 
same  time,  and  thus  show  that  every  fall  in  price  here  was 
preceded  by  a  fall  to  an  even  lower  point  there,  the  fact 
that  they  would  bring  out  would  be  merely  that  protec- 
tion prevented  the  price  from  falling  as  fast  here  as  it 
otherwise  would.  The  true  causes  of  the  fall — improve- 
ments in  the  process  of  making  steel  and  the  expiration 


274        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

of  patents  guarding  it — are,  of  course,  never  alluded  to  by 
the  faithful  Protectionist.  Second,  the  English  must  be 
those  who  suffer  from  our  high  duties,  because  they  are 
so  anxious  to  have  us  lower  them.  Let  me  assure  you, 
they  are  not  anywhere  nearly  so  anxious  for  us  to  lower 
our  duties  as  people  pretend.  What  is  told  you  about 
large  disbursements  by  their  Cobden  Club  is  3  per 
cent,  exaggeration  and  97  per  cent,  sheer  invention.  A 
great  many  lines  of  export  trade,  including  most  of  that 
to  South  and  Central  America,  Japan,  and  Australia,  the 
English  now  have  a  "  soft  thing"  of,  owing  to  our  persist- 
ence in  running  up  the  cost  of  our  raw  materials  and 
machinery  for  manufacturing,  and  in  preventing  our  citi- 
zens from  owning  ships  to  send  there.  Were  we  to  adopt 
a  commercial  policy  like  their  own  we  might  become  for- 
midable rivals  in  this  business,  as  we  promised  to  become 
before  the  Civil  War. 

Notwithstanding  this  state  of  things,  of  which  observant 
Englishmen  are  perfectly  aware,  I  do  not  deny  that  if  the 
question  of  our  tariffs  were  to  be  left  to  them,  they  would 
probably  think  more  of  gaining  custom  with  us  than  of 
losing  it  with  remoter  countries,  and  vote  a  reduction  by 
a  large  majority.  But  the  laughable  part  of  the  business 
is  that  that  fact,  if  it  be  a  fact,  should  make  any  difference 
to  you.  Let  me  put  to  you  a  test  question.  One  of  you, 
we  will  suppose,  lives  across  the  river  from  a  large  town. 
You  raise,  we  will  also  suppose,  better  oats,  or  turnips,  or 
something  than  Jones,  just  over  the  bridge,  and  can  afford 
to  sell  them  at  a  lower  price.  Now  if  Jones  mounted 
guard  over  the  bridge  so  as  to  keep  you  from  getting 
across  with  your  produce,  would  you  object  to  it,  or  not  ? 
And  what  would  you  think  if  the  townspeople,  hearing 
your  complaints,  should  set  them  down  as  a  proof  that 
you  were  the  only  sufferer  by  the  closing  of  the  bridge, 


PROTECTION  A  AW  AGRICULTURE.  2/5 

and  that  they  were  just  as  well  off  in  putting  up  with  the 
inferior  and  more  costly  goods  of  Jones  ? 

There  has  been  so  much  loose  talk  on  this  question  of 
"Who  pays  the  tax?"  that  I  ought  to  take  special  pains 
to  make  my  own  meaning  clear.  I  have  not  denied,  and 
do  not  wish  to  deny,  that  there  are  articles  (those  whose 
production  is  monopolized,  namely,  or  controlled  by  a 
combination)  upon  which  the  larger  part  of  any  tax  we 
impose  may  fall  on  the  producer.  Certain  drugs,  and 
tropical  fruits,  and  other  articles  produced  within  limited 
areas,  may  be  taken  as  examples.  To  include  with  these 
such  products  of  widely  sundered  regions,  as  wool  and 
crude  metals,  is  hardly  better  than  an  affront  to  common- 
sense.  I  have  not  denied,  and  do  not  wish  to  deny,  that 
to  answer  the  question  completely,  to  show  precisely 
what  charges  each  man  has  to  bear  or  what  profits  he 
misses  in  consequence  of  the  tax,  it  would  be  necessary 
to  know  just  how  matters  would  stand  if  there  were  no 
tax  ;  which  is  hardly  possible  to  human  wisdom,  in  ad- 
vance of  actual  trial.  One  can  use  his  best  judgment, 
and  give  his  reasons — that  is  all.  I  have  not  denied,  and 
do  not  wish  to  deny,  that  if,  in  consequence  of  this  tax, 
the  foreign  producer  is  not  allowed  an  extension  of  his 
business  which  he  would  be  willing  to  pay  money  to 
insure,  or  is  subjected  to  any  inconvenience  which  he 
would  be  willing  to  pay  money  to  escape,  he  is  as  truly 
taxed  to  that  extent  as  if  he  personally  handed  the  sum 
to  Uncle  Sam's  collectors.  But  no  conclusion  could  be 
more  puerile  than  that,  because  the  duty  taxes  him  by 
such  an  amount,  it  therefore  saves  as  much  to  you.  The 
tariff  is  a  tax  of  which  the  foreigner  pays  a  portion,  while 
you  pay  more  than  the  whole  in  addition  ;  this  is  true, 
because  what  the  government  receives  is  but  a  part  of 
what  is  lost  in   the  passage  between   producer  and  con- 


27<^         ECONOMIC  AND    INDVSTRfAL    DErUS/ONS. 

sumer.  The  obstacles  which  hold  the  two  apart  are  a 
charge  on  both  ;  transportation  more  costly  because  of 
taxed  ships  and  scantier  trade — choice  of  goods  and  of 
markets  restricted  by  the  barrier — profits  to  middle-men 
levied  on  the  extra  cost  as  well  as  on  what  is  paid  the 
producer — all  these  must  be  reckoned  along  with  the 
duty.  To  estimate  the  foreigner's  cost  as  equal  on  the 
average  to  this  extra  charge,  so  that  the  consumer  here 
is  left  with  merely  the  entire  duty  as  his  cost,  is  estima- 
ting quite  too  liberally. 

POINTS  TO  BE  TESTED  AND  PITFALLS  TO  BE  ESCAPED. 

Now  permit  me  to  go  over  the  points  I  have  undertaken 
to  make  :  i.  That  there  is  never  any  great  movement  of 
gold  and  silver  in  trade  between  nations  unless  there  is 
somewhere  an  unusual  demand  for  them.  2.  That  in  con- 
sequence revenue  devices  cannot  change,  and,  in  fact, 
never  do  change,  the  relative  proportions  of  imported  and 
exported  goods.  3.  That  if  duties  cause  a  reduction  in 
imports  they  must  inevitably  bring  about  an  equal  reduc- 
tion in  exports.  4.  That  this  can  only  be  done  by 
preventing  those  who  have  exportable  goods — particularly 
farmers — from  exporting  them.  5.  That  the  pretence  of 
increased  home  consumption,  alleged  to  account  for  this, 
is  baseless.  6.  That  the  prevention  of  exportation  of 
farm  produce  must  therefore  be  brought  about  by  increas- 
ing cost  of  production  and  lowering  the  effective  reward 
of  the  farmer's  labor.  7.  That  every  pretence  that  the 
system  acts  otherwise — that  it  somehow  throws  the  cost 
of  protection  upon  the  foreigner — is  opposed  to  reason 
and  to  experience.  Of  all  these  points  I  gave  as  much 
proof  as  there  was  room  for ;  and  I  earnestly  hope,  as  my 
aim  is  more  than  anything  else  to  have  you  see  the  matter 


PROTECTION  AND  AGRICULTURE.  lyy 

as  it  truly  is,  that  you  will  take  all  possible  pains  to  test 
my  argument  both  by  reflection  and  searching  of  facts. 

Do  not  be  misled,  in  making  the  test,  by  plausible  irrel- 
evancies.  Do  not  be  persuaded  into  forgetting  that 
American  labor  can  be  protected  only  by  or  at  the 
expense  of  American  labor,  and  that  whatever  one  trade 
gains  others  have  to  stand  the  charge  of.  Do  not  be 
cajoled  into  the  delusion  that  you  need  "  protection  "  in 
this  market  when  you  know  that  you  are  able  to  meet 
competitors  in  foreign  markets.  Do  not  let  people  throw 
obstacles  in  the  way  of  your  reaching  foreign  markets 
under  the  plea  that  these  are  "  uncertain "  and  "  un- 
reliable." If  they  really  are  so  exports  will  fall  of  them- 
selves, and  ''  protection  of  home  industries  "  will  there- 
fore be  quite  unnecessary.  Do  not  let  them  frighten  you 
with  the  prospect  of  competition  in  your  own  field  of 
labor,  with  workmen  thrown  out  of  factories,  when  the 
highest  reasonable  estimate  of  the  number  of  workmen 
that  absolute  free  trade  could  throw  out  of  employment 
is  less  than  that  of  our  able-bodied  immigrants  in  three 
years.  Do  not  let  them  ascribe  the  general  prosperity  of 
our  people — not  so  high,  you  very  well  know,  as  it  ought 
to  be — to  taxation,  until  allowance  is  made  for  the  fact 
that  this  country  (leaving  out  Alaska)  has  about  thirty 
acres  to  each  inhabitant,  while  England  has  less  than  two. 
Any  man  who  conceals  this  fact  in  comparing  industrial 
conditions  in  the  two  countries  thereby  proves  his  blind- 
ness or  his  dishonesty.  Do  not  give  protection  credit  for 
the  progress  of  our  country  until  you  have  seen  what 
great  forward  strides  have  been  made  by  England  and 
New  South  Wales  without  protection.  Treat  with  just 
contempt  all  insinuations  that  those  who  are  engaged  in 
the  endeavor  to  reduce  the  burdens  upon  you  are  "  agents 
of  foreign  manufacturers,"   or  "  enemies  of  the  working 


278         FA'ONOMIC  AND   INDUSTRIAL    DULUSIONS. 

man,"  or  "enemies  of  the  old  soldier,"  or  "Confederates." 
It  is  true,  possibly,  that  people  of  all  these  classes  desire 
lower  duties,  as  it  is  that  sheep  and  hyenas  are  animals  ; 
but  it  no  more  follows  that  all  others  who  desire  lower 
duties  belong  to  these  classes  than  it  follows  that,  because 
they  are  animals,  they  are  therefore  sheep  or  hyenas. 

So  much  is  made  of  the  fact  that  the  tariff-reform 
movement  draws  a  large  part  of  its  strength  from  the 
South,  and  so  strenuous  are  the  efforts  made  to  enlist  all 
that  remains  of  the  old  war  feeling,  all  your  zeal  for  the 
Union  of  our  fathers  and  for  human  rights,  in  the  service 
of  mine  and  factory  owners  and  other  banded  boodlers — 
to  put  the  noblest  of  sentiments  to  the  most  debased  of 
uses — that  I  could  not  elude  the  subject  if  I  would.  It  is 
not  possible  for  any  of  you  to  be  more  earnest  in  behalf 
of  the  Union,  or  of  the  liberation  of  .our  colored  fellow- 
men  than  I  was  and  am.  But  I  never  dreamed  that  I  was 
so  committing  myself  to  the  policy  of  making  the  farmer 
a  perpetual  sacrifice  to  the  interests  that  are  now  preying 
upon  him.  I  never  saw  either  justice  or  sense  in  using 
alleged  wrongs  of  the  colored  citizen  as  a  cloak  to  cover 
real  wrongs  against  you.  The  hypocrisy  of  the  Republi- 
cans of  to-day  is  shown  by  the  fact  that  they  are  united  on 
no  legislative  measure  for  the  benefit  of  the  freedmen, 
and  that  the  one  practical  use  to  which  they  propose  to 
turn  the  uproar  they  are  raising  in  his  behalf  is — what? 
Great  heavens — a  scheme  for  counting  in  a  few  more 
high-tariff  representatives  from  Southern  States  I 

You  ought  to  look  at  the  position  of  the  Southerners 
thoughtfully  and  dispassionately.  If  they  oppose  protec- 
tion it  is  because  they  know  what  will  advance  agricul- 
ture, the  great  interest  of  the  South  ;  and,  on  this  point, 
their  interest  is  your  interest.  Have  you  any  doubt  of 
that?    If  the  protective  system  is  good  for  your  industry, 


PROTECTION  AND   AGRICULTURE.  2/9 

why  not  for  the  same  industry  in  the  Southern  States? 
And  if  it  is  really  to  their  interest  to  support  it,  why  do  they 
oppose  it  ?  The  agriculturists  of  the  Southern  States  are 
not  more  intelligent  than  those  of  my  own  section,  I 
willingly  grant.  But  they  are  reasoning  men,  neverthe- 
less ;  and  no  result  of  the  Civil  War  will  be  endangered  in 
the  least  if  you  stop  and  study  out  a  candid  answer 
to  these  questions. 

PRESENT    AGRICULTURAL    DEPRESSION. 

That  the  farming  interests  of  the  country  are  not  pros- 
pering as  they  should  must  be  well  known  to  all  of  you. 
You  raised  in  1889  greater  crops  than  ever  before,  but 
the  increase  was  prevented,  somehow,  from  working  in 
your  favor.  Prices  have  fallen  more  than  your  production 
has  risen.  The  census  of  1880  already  showed,  in  its 
comparative  tables  of  property  located  and  property 
owned,  that  a  considerable  portion  of  the  land  of  the 
great  agricultural  West  was  owned  in  the  East ;  that  of 
1890,  if  fairly  taken,  will  show  the  same  thing  in  stronger 
colors.  The  amount  of  your  land  held  under  mortgages 
to  non-residents  every  one  knows  to  be  huge,  and  it  is 
hoped  that  the  next  census  will  furnish  particulars.  Farms 
in  the  older  States  are  deserted  by  the  hundred  and  begging 
for  purchasers  at  prices  less  than  the  cost  of  the  buildings 
on  them.  Farm  values  have  fallen  even  where  the  farms 
are  all  occupied.  An  increased  value  of  real  estate  is 
reported  only  in  the  cities  and  their  suburbs.  The 
farmer's  boy  does  not  take  to  his  father's  calling  as  he 
used  to.  The  amount  of  wealth  held  by  farmers  is,  pro- 
portionally to  the  total  wealth  of  the  community,  far 
smaller  now  than  thirty  years  ago.  That  was,  by  com- 
parison, a  golden  age  for  American  agriculture.     Can  you 


28o        ECONOMIC  AND    INDUSTRIAL    DELUSIONS. 

fail  to  recognize  the  cause  to  which,  in  great  degree  at 
least,  this  state  of  things  is  owing?  Can  you  allow  your- 
selves to  be  misled  in  regard  to  it,  because  you  happen  to 
be  unable  to  tell  exactly  where  your  money  goes,  and 
how  you  fail  of  getting  the  return  to  which  you  are 
entitled  ?  For  me  it  is  enough  to  know  that  a  gun  was 
fired  in  your  direction,  and  that  you  have  been  struck  by 
something ;  I  do  not  feel  obliged  to  trace  the  bullet 
through  every  inch  of  its  passage  from  muzzle  to  mark. 
Evidence  of  exactly  the  same  kind  that  the  protective 
system  is  the  cause  of  your  injury,  is  in  your  hands. 
You  cannot  make  the  injury  less  by  blinding  your  eyes  to 
the  evidence. 

DUTIES     ON     FARM     PRODUCE     IN     THE     McKINLEY     BILL. 

The  subject  proposed  for  this  letter  was  the  McKinley 
bill  and  the  arguments  made  in  behalf  of  it.  Instead  of 
examining  these  at  once,  I  have  given  five  sixths  of  my 
space  to  a  preliminary  discussion ;  but  this  course  is  not 
unwise,  I  think,  because  we  must  have  some  groundwork 
of  general  principles  to  stand  on  before  we  can  see  how  to 
judge  the  bill  at  all.  If  we  have  prepared  our  ground- 
work rightly,  the  judgment  follows  as  a  matter  of 
course. 

That  the  statesman  who  framed  this  bill  has  labored 
zealously  for  your  approbation,  is  very  clear.  If  it  is 
passed,  most  of  the  things  raised  on  farms  will  be  dearer 
to  every  one  who  undertakes  to  import  them.  The  gain 
to  you  (measured  exactly  by  the  loss  to  possible  im- 
porters) you  can  easily  estimate  when  you  have  found 
how  much  of  the  articles  to  be  protected  is  now  imported. 
Animals  of  all  domestic  kinds  are  among  the  items  largely 
increased.     But  we  do  not  import  many  of  them ;  on  the 


PROTECTION  AND  AGRICULTURE.  28 1 

contrary,  we  more  than  supply  our  own  market,  and  have 
such  animals  for  export.  Wheat,  corn,  and  oats :  ditto, 
ditto.  The  best  that  can  be  said  of  these  provisions  is 
that  they  are  a  dead  letter,  and  were  designed  so  to  be — 
that  is  to  say,  a  conscious  humbug.  Such  practical  opera- 
tion as  they  can  have  will  be  to  prevent  you  from  improv- 
ing your  fields  by  the  importation  of  seed  grains,  or  your 
stock  by  bringing  in  any  animal  that  you  cannot  prove  to 
be  "  for  breeding  purposes."  Barley  is  increased.  Weren't 
you  just  suffering  for  that  ?  Potatoes  are  advanced  from 
15  to  25  cents.  At  present  rates  we  some  years  im- 
port fewer  potatoes  than  we  export,  and  only  half  the 
time  does  the  amount  reach  one  per  cent,  of  the  crop 
raised  in  this  country.  In  but  two  years  of  the  last 
thirteen,  1882  and  1888,  did  the  importation  of  them 
rise  as  high  as  three  per  cent.,  and  those  years  followed 
very  poor  yields  the  preceding  fall ;  two  thirds  of  a  crop, 
made  to  cost  the  consumers  more  than  do  many  full 
crops.  Is  it  not  plain  that  the  only  aid  the  duty  can 
bring  you  is  in  making  scarcer  a  food  that  is  particularly 
the  resource  of  the  poor,  at  times  when  nature  has  been 
least  kind  to  them^ — at  times,  I  should  add,  when  you 
have  least  to  sell  ?  To  my  mind,  the  idea  of  coining 
money  by  procuring  legislation  to  help  in  starving  my 
fellow-beings  is  something  little  less  than  infamous  ;  but 
the  cruelty  of  this  blow  at  the  defenceless  is  not  more 
conspicuous  than  the  stupidity  of  upholding  an  expensive 
protective  system  for  the  sake  of  gains  that  only  come  in 
exceptional  years,  when  the  potatoes  are  not  in  your 
hands  to  sell,  and  the  same  farmers  who  usually  have  a 
surplus  may  be  compelled  to  buy  for  their  own  use. 
Hay  is  increased.  How  far  could  imported  hay  be  car- 
ried, even  though  free,  do  you  calculate,  before  losing  its 
whole  value  in  cost  of  carriage  ? 


282         r.CONOMIC  AMD  INDUSTRIAL   DELUSIONS. 
THE    OTHER    SIDE    OF    THE    ACCOUNT. 

So  much  for  what  this  bill  proposes  to  do  for  you. 
Now  let  us  examine  what  there  is  on  the  other  side.  I 
know  that  such  an  examination  is  considered  irregular; 
that  those  who  have  charge  of  measures  of  this  kind  call 
no  attention  to  any  other  provisions  but  those  for  pre- 
venting the  importation  of  the  goods  that  you  produce, 
and  represent  those  provisions  as  being  the  whole 
measure.  Only  those  proposing  to  manufacture  tin  plates 
(a  firm  of  Pittsburg  capitalists  in  the  present  case)  by  this 
reasoning  need  be  interested  in  the  duty  on  tin  plates. 
But  we  are  not  to  be  manipulated  in  this  way.  We  are 
interested  in  this  duty  as  well  as  others,  you  and  I,  and 
we  propose  to  see  how  it  will  affect  us.  We  know  that 
the  proposed  increase  is  and  can  only  be  for  the  purpose 
of  increasing  the  cost  of  plates,  since  government  can 
help  to  increase  the  profits  of  domestic  producers  of 
them  in  no  other  possible  way;  we  know  that  these 
plates  are  necessary  for  buckets  and  pans  and  cans  of  all 
kinds,  and  form  a  considerable  item  in  the  cost  of  agri- 
culture, in  the  meat  and  fruit  preserving  and  dairying 
industries ;  we  know  that  any  increase  in  the  expense  of 
the  tins  must  be  passed  down  to  the  consumer — to  all  of 
us,  that  is, — and  it  may  so  embarrass  the  trade  as  to  drive 
out  many  private  canners  doing  a  small  business  in  the 
back  country  districts  ;  we  know  also  that  our  exports  of 
canned  goods  raised  by  farmers  give  markets  and  added 
value  to  surplus  fruits,  vegetables,  and  meats,  and  that 
this  trade  would  be  crippled  if  not  totally  ruined  by  the 
proposed  duty.     Does  that  not  interest  us  ? 

Consider  the  proposed  increase  on  lead  ore,  and  the 
smelting  establishments  now  using  ore  from  Mexico  that 
would  be  broken  up  by  it.  The  retaliatory  duty  Mexico 
proposes  putting  on  imports  of  our  corn  will  still  further 


PROTECTION  AND   AGRJCr l.TURE.  283 

injure  the  farmer.  Consider  also  the  increase  on  wool. 
What  our  wool  tariff  does  for  us  I  have  already  tried  to 
show  you.  Some  of  you  may,  perhaps,  make  something 
b^  :he  increase  if  it  ever  goes  into  effect,  but  not  many. 
1  do  not  think  that  our  factories  will  pay  much  higher 
prices  for  your  wool — they  cannot  afford  to  and  remain 
in  business.  The  most  significant  increase  is  in  the  kind 
of  wool  that  you  do  not  grow — the  coarse  fibres  used  for 
carpets.  The  one  certain  thing  about  it  is  that  it  must 
make  your  carpets  dearer  (a  well-known  manufacturer 
tells  me  that  the  material  in  a  plain  ingrain  carpet,  such 
as  is  used  by  most  of  you,  will  cost  more  after  the 
passage  of  the  McKinley  bill  than  the  finished  carpet 
does  now),  and  compel  you  to  go  without,  or  else  be 
content  with  poorer  quality. 

One  provision  that  was  left  out  of  the  bill  is  quite  as 
instructive  as  anything  contained  in  it.  As  originally 
prepared  it  provided  for  a  duty  on  hides.  This  was  all 
for  you,  of  course ;  notwithstanding  the  fact  that  few  of 
you  have  hides  to  sell  in  such  quantities  that  you  could 
make  much  by  the  duty,  and  that  all  of  you  wear  the 
boots  and  shoes,  and  drive  with  the  harness,  whose  cost 
would  be  increased  by  it.  Mr.  McKinley's  committee 
loved  you  (or  Armour  &  Co.,  of  Chicago,  I  should  rather 
say)  so  much  that  it  was  ready  to  sacrifice  our  trade  in 
shoes  with  Canada,  which  could  not  bear  any  increase  in 
the  cost  of  leather.  It  yielded  the  provision,  though — 
and  why  ?  Only  because  the  consummation  of  the  deal 
with  Armour  would  have  left  it  without  votes  enough  to 
pass  its  bill. 

SECRETARY  RUSK's  BID. 

The  letter  of  Mr.  Rusk  does  not  call  for  much  of  our 
attention.     He   gives  you   a    good  deal  of  advice  about 


284         ECONOMIC  AND   INDUSTRIAL    DKLU SIGNS. 

private  economy,  railroads,  speculative  combinations,  and 
other  matters,  with  which  I  have  no  fault  to  find.  His 
professed  opinion  that  "  the  present  agricultural  depres- 
sion "  is  due  to  "our  imports  of  agricultural  products" 
will  be  easy  to  weigh  when  we  have  considered  the 
remedy  he  proposes  :  that  of  making  scarcer  and  dearer 
such  products  as  we  import,  so  that  you  may  be  forced 
into  raising  them  yourselves.  Accepting  his  figures  (al- 
though misleading  in  the  exaggerated  idea  they  give  of 
the  competition  you  have  to  withstand),  we  seem  to  im- 
port $250,000,000  of  agricultural  products  that  might 
possibly  be  raised  here.  Well,  how  do  we  pay  for  them? 
What  industries  now  supported  by  sending  produce  abroad 
to  buy  them  does  he  propose  to  sacrifice?  Or  what  else 
worth  $250,000,000  does  he  propose  to  have  us  import? 
A  practical  man,  making  a  recommendation  in  good  faith, 
would  have  looked  carefully  into  these  questions.  Mr. 
Rusk  makes  no  allusion  to  them.  For  anything  that  ap- 
pears in  his  letter  he  might  be  as  ignorant  as  a  baby  that 
there  were  any  such  questions  to  consider.  Or  he  might 
perhaps  fancy  that  we  paid  for  this  yearly  importation 
out  of  the  $30,000,000  of  gold  and  $60,000,000  of  silver 
that  our  mines  annually  yield.  (I  should  be  delighted  if 
we  could.)  For  Secretary  Rusk  personally  I  have  none 
but  the  kindliest  of  feelings,  and  I  cordially  hope  for  him 
the  happiest  thing  possible — that  he  will  resign  the  dis- 
cussion of  political  economy  to  people  better  equipped 
for  it. 

A    CONFIDENCE  GAME. 

Are  you  not  convinced  that  Mr.  McKinley's  new  "  far- 
mers' tariff "  and  committee  report  are  only  a  little  confi- 
dence game — that  his  party  is  making  a  great  clatter 
about  the  increase  of  duties  on  your  products  in  order 
to    draw    attention    away    from   the  increases  that    truly 


PROTECTION  AND  AGRICULTURE.  285 

count  for  something,  those  of  the  products  of  the  "  cam- 
paign boodler/'  about  which  nothing  is  said  to  you — on 
the  principle  of  the  adroit  juggler  who  always  has  some 
by-play  to  distract  your  eye  and  your  attention  while  he 
is  performing  his  trick?  I  can  see  in  it  nothing  else. 
When  you  have  studied  the  mazes  and  dark  corners  of 
the  tariffs  a  little  longer,  you  will  be  able  to  see  duplicity 
almost  everywhere.  Nowhere  are  their  promoters  so  ready 
to  make  victims  as  in  your  own  calling.  They  know  the 
power  of  your  mighty  numbers,  against  whose  opposition 
their  ablest  efforts  would  be  hopeless,  and  they  seek  to 
enlist  you  by  inflaming  your  unworthiest  prejudices,  be- 
fogging the  issue,  and  beguiling  you  with  misrepresenta- 
tions. Some  of  their  tricks — for  example,  besides  those 
I  have  exposed,  there  is  that  one  of  pretending  that  the 
duty  on  manufactures  is  for  the  purpose  of  making  them 
cheaper,  and  that  on  your  products  it  is  at  the  same  time 
for  the  purpose  of  increasing  the  price  ;  or  that  other  one 
of  pointing  at  a  few  "trusts"  not  built  up  by  the  tariff, 
and  pretending  that  they  thus  prove  that  the  tariff  does 
not  build  up  "  trusts,"  just  as  they  might  pretend  that 
exposed  cesspools  do  not  cause  disease,  because  they  do 
not  cause  hydrophobia — are  really  so  shallow  that  I  am 
quite  sure  they  cannot  long  mislead  you.  You  are  be- 
ginning to  reflect,  to  think  for  yourselves,  and  when  you 
have  once  learned  to  do  that  the  victory  is  won.  United, 
you  are  irresistible. 

The  case  is  now  in  your  hands.  Your  decision  is  more 
important  to  yourselves  than  to  anybody  else  in  the 
world  ;  and  the  issue  of  welfare  or  disaster  is  one  that 
comes  so  closely  home  to  you  that  no  words  of  mine  are 
needed  to  lay  stress  upon  it.  Its  gravity  is  such,  more- 
over, that  all  the  light  you  can  possibly  gather  will  be 
none  too  bright  to  pierce  the  dust  and  the  fogs  that  have 


286        ECONOMIC  AND   INDUSTRIAI    DELUSIONS. 

been  thrown  about  it.  If  I  have  brought  you  a  little 
new  light,  if  I  have  made  any  point  clearer,  or  ex- 
posed any  stumbling-block  in  your  path,  by  this  essay,  I 
shall  be  well  repaid  for  the  trouble  it  has  cost  me.  Again 
I  remind  you,  your  interests  are  my  interests,  and  I  am 
far  less  anxious  that  you  should  agree  with  me  than  that 
you  should  know  the  truth,  wherever  the  truth  is  to  be 
discovered. 


The  second  letter,  dated  July,  1891,  and  adapted  to  the 
newer  questions  before  the  farmer  for  his  verdict,  was  pre- 
pared for  the  present  volume. 

Open  Letter  to  American  Farmers,  No.  2. 

A  year  ago  the  important  legislation  of  the  Fifty-first 
Congress  had  not  yet  been  enacted.  The  public  revenues 
were  under  active  discussion  ;  the  tariff  bill,  which  de- 
clared the  policy  of  the  party  in  power,  had  just  been 
hurried  through  the  popular  House,  and  was  about  to 
enter  upon  its  three  months'  overhauling  in  the  Senate. 
This  tariff  of  1890,  with  an  amendment  providing  for 
something  announced  as  "  reciprocity,"  went  into  effect 
in  October  ;  elections  for  a  new  Congress  immediately 
followed  ;  conventions  of  a  zealous  and  influential  section 
of  your  own  number,  well  known  as  the  "  Farmers'  Al- 
liance," were  held  in  different  cities  of  the  Union,  and 
demands  for  important  new  legislation  were  enthusiasti- 
cally resolved  on.  Within  the  year,  also,  a  liberal  exten- 
sion of  the  pension  list  has  been  made,  a  law  providing 
for  greatly  increased  silver  purchases  has  gone  into 
execution,  and  a  few  treaties  embodying  the  so-called 
"  reciprocity  "  have  been  promulgated.  In  all  these 
changes  your  own  interests  have  been  involved,  one  way 


PROTECTION  AND  AGRICULTURE.  28/ 

or  another  ;  and  the  question  I  now  invite  you  to  con- 
sider with  me  is  whether  you  have  had  any  substantial 
benefit,  or  maj^  reasonably  expect  any  benefit,  from  them. 
How  much  has  been  gained  or  lost  for  your  calling  by 
the  legislative  measures  of  the  past  year,  and  what  have 
you  to  hope  from  the  projects  of  the  Alliance  that  assumes 
to  represent  you  ? 

WHAT   IS   CLAIMED    FOR    THE    McKINLEY   TARIFF. 

Dealing  first  with  Major  McKinley's  tariff,  you  hear  it 
claimed  to  have  increased  the  value  of  your  crops,  and  to 
have  reduced  the  price  of  some  of  your  necessaries,  while 
not  sensibly  increasing  that  of  the  others.  Very  few 
words  are  needed  for  the  consideration  of  the  first  of 
these  claims ;  for  the  prices  of  the  principal  agricultural 
staples  are  not  in  the  least  affected  by  foreign  competi- 
tion. Not  a  year — certainly  none  since  1880 — have  we 
exported  less  than  one  hundred  times  the  wheat,  and  one 
thousand  times  the  corn,  that  we  imported  ;  and  not  a 
year  has  the  price  in  our  markets,  thus  completely  at  the 
command  of  the  home  products,  failed  to  show  by  falling 
or  rising  the  effect  of  larger  or  scantier  crops.  The  price 
of  these  staples  increased  last  winter,  because  the  yield  of 
the  preceding  season  was  less;  but  it  was  far  exceeded  by 
the  price  ten  years  ago,  under  the  old  rates  of  duty.  You 
will  call  to  mind  that  those  who  advocate  reduction  of 
the  tariff  in  your  interest  have  not  laid  their  chief  stress 
on  the  higher  prices  at  which  you  would  sell,  but  the 
lower  prices  at  which  you  would  buy  ;  for  while  your 
principal  crops  must  bring  you  nearly  the  same  return  in 
money,  whether  the  duty  be  zero  or  a  hundred  per  cent., 
with  your  purchases  it  is  very  different.  We  will  now  see 
how  these  are  affected  by  the  new  tariff. 


288         KCONOMIC  AA/D   IXDUSTRIAL    DELUSIONS. 

The  duties  on  a  few  iron  and  steel  products,  in  which 
our  tariff  beneficiaries  were  believed  to  be  secure  of  their 
monopoly,  have  been  reduced  by  a  hair's  breadth  or  two. 
The  very  reason  which  induced  the  gallant  Major  to  make 
these  trifling  reductions — that  they  could  not  appreciably 
hurt  the  iron  men — will  effectually  prevent  them  from 
being  of  any  use  to  you.  Cutlery,  however,  in  which  you 
would  find  a  reduction  of  use,  has  an  enormous  increase 
of  duties.  On  an  obscure  item  here  and  there,  in  several 
other  parts  of  the  act,  there  has  been  a  decrease  ;  but  the 
one  significant  achievement  in  this  direction  has  been  in 
the  item  of  raw  sugar.  The  duty  on  this  has  been  re- 
moved, and  the  price  of  all  sugars  has  immediately  felt 
the  influence.  Cause  and  effect  were  never  more  dis- 
tinctly manifested. 

It  is  a  remarkable  fact  that  we  owe  this  clear,  striking, 
and  unmistakable  proof  of  the  effect  of  a  duty  on  a  price 
to  Protectionist  legislation.  It  was  not  intentional  on 
the  part  of  Major  McKinley  and  his  friends  to  show  you 
so  plainly  how  their  protective  policy  was  burdening  you. 
But  when  you  consider  that  their  great  object  was  to 
prevent  your  other  burdens  from  growing  lighter;  that  if 
they  could  attain  that  object  in  some  degree  by  the  inven- 
tion of  manifold  ways  of  consuming  the  public  money, 
reaching  the  all  unprecedented  figure  of  a  thousand  mil- 
lion dollars  in  two  years,  they  could  bring  it  about  the 
more  effectually  by  cutting  away  some  important  source 
of  public  revenue  ;  that  it  is  always  difficult  for  a  popular 
Assembly  to  reimpose  a  tax  when  once  removed  ;  and 
that  the  tax  on  sugar,  besides  bringing  in  a  large  revenue, 
had  no  protective  effect  except  for  States  that  refused  to 
join  in  heaping  up  protective  burdens  on  their  fellows,  and 
was  therefore  admirably  fitted  as  a  sacrifice  ;  when  you 
consider  these  points,  you  will  easily  understand  how  this 


PROTECTIOA'  AND   AGRICULTURE.  289 

change  came  to  be  made.  Had  they  been  real  and  not 
sham  statesmen  they  would  have  selected  wool  rather 
than  sugar  for  an  experiment  of  this  kind  ;  thus  providing 
abundance  in  place  of  scarcity  of  material  for  one  of  our 
most  important  manufactures,  and  greatly  increasing  the 
comfort  of  every  citizen  who  has  to  think  twice  about  the 
cost  of  the  garments  and  carpets  he  buys.  But  they 
chose  sugar,  and  its  immediate  fall  in  price  clearly  pointed 
out  who  had  been  paying  the  import  tax  upon  it.  A 
farmer  of  my  acquaintance  professed  surprise  when  he 
found  himself  charged  five  instead  of  seven  cents  a  pound 
for  his  sugar,  and  asked  the  reason.  "  Why,  it  's  the  new 
tariff — don't  you  read  the  papers  ?  "  was  his  grocer's  an- 
swer. To  this  the  farmer  objected  :  "  I  don't  see  how  ; 
I  thought  the  import  duty  was  something  the  foreigner 
paid  for  admission  to  our  markets."  Had  he  confined  his 
reading  to  Protectionist  literature — to  the  essay  of  Sena- 
tor Edmunds,  for  example,  wherein  that  ripe  statesman 
adduced  the  case  of  the  cheaper  grades  of  coffee  in  1872 
as  conclusive  proof  that  taking  off  import  duties  did 
not  reduce  prices — he  must  certainly  have  been  quite  un- 
prepared for  any  such  effect. 

While  greatly  curtailing  the  resources  of  the  gov- 
ernment, therefore,  the  relief  of  sugar  from  taxation 
benefited  you — but  how  much  ?  The  fall  in  price  was 
about  two  cents  a  pound  ;  the  duty  actually  taken  off  was 
less  than  two,  but  the  effect  of  a  tariff  duty  is  usually  to 
increase  the  cost  of  the  taxed  article  to  the  consumer  b}- 
more  than  its  full  amount,  because  the  rate  of  profit 
necessary  to  keep  the  retail  merchant  in  business  is,  and 
must  be,  charged  against  every  part  of  the  cost  (whether 
paid  to  producer,  to  transporter,  or  to  government),  and 
all  parts  of  the  importer's  expense  are  therefore  increased 
in  the  same  ratio  when  the  consumer  comes  to  pay  them. 


290        ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

A  family  that  uses  two  hundred  and  fifty  pounds  of  sugar 
per  annum  will  save,  at  the  two-cent  rate,  five  dollars  by 
favor  of  the  McKinley  law  ;  but  few  are  the  families  that 
will  not  have  to  pay  as  much  more  for  clothes,  whose 
price  has  been  increased  by  that  law.  Cheap  clothes  are 
still  as  plenty  as  ever,  I  admit ;  our  dealers  find  it  easy 
enough  to  sell  at  the  old  prices,  taking  only  the  simple  pre- 
caution to  give  a  lower  proportion  of  wool  and  a  higher 
proportion  of  shoddy  with  each  yard  of  stuff;  but  if  the 
buyer  insists  on  having  the  same  quality,  he  will  find  that 
he  must  pay  a  difference.  A  suit  of  clothes,  or  an  over- 
coat, as  good  as  he  got  for  $20  last  year  will  now  cost  him 
$25  probably,  and  thus  absorb  in  one  payment  his  year's 
saving  by  cheaper  sugar.  If  his  wife  has  to  have  a  cloth 
or  silk  dress,  in  addition,  the  increased  cost  of  that  will 
be  so  much  more  on  the  debit  side.  If  his  floor  requires 
a  new  carpet,  the  terms  to  be  had  are  no  longer  what 
they  were ;  and  he  will  have  to  keep  a  sharper  lookout 
than  ever  on  the  quality  of  w^hat  is  sold  him.  All  the 
furniture  of  his  table — cutlery,  crockery,  glassware — is 
similarly  increased  in  price  or  deteriorated  in  quality  by 
the  new  legislative  narrowing  of  competition. 

THE    "  RECIPROCITY    TREATIES." 

Certain  arrangements  with  various  powers,  in  America 
to  the  south  of  us,  have  been  made  in  pursuance  of  the 
McKinley  law.  They  provide  that  in  consideration  of 
our  government's  abstention  from  taxing  raw  sugar,  coffee. 
and  hides,  the  contracting  powers  shall  admit  various 
specified  manufactures  from  our  country,  either  free  or 
under  a  reduced  import  duty.  These  arrangements  are 
advertised  as  a  grand  benefit  to  you,  because  agricultural 
products  are  included  with  the  manufactured  articles  to 
be  admitted  on  easier  terms.    The  extent  of  Latin  America 


PROTECTION  AND   AGRICULTURE.  29I 

is  vast,  its  number  of  inhabitants  great  and  growing ;  and 
it  is  concluded  from  these  facts  that  a  rich  market  has 
been  opened  to  your  products  by  the  treaties. 

The  countries  with  which  these  treaties  are  made  can- 
not aiTord  to  pay  very  profusely  for  your  produce,  and  it 
is  not  expected  that  such  increased  purchases  as  they 
may  make  will  greatly  improve  the  prices  paid  you  ;  but 
it  is  expected  that  your  sales  will  be  increased  in  number, 
and  any  gain  of  that  kind  which  it  is  possible  for  you 
to  obtain  from  this  source,  will  be  confessedly  so  much 
clear.  The  duty  that  a  South  American  country  sets 
upon  our  produce,  even  though  its  own  citizens  pay  it  in 
any  of  the  sales  we  may  actually  make,  injures  us  as  well 
as  them  by  preventing  other  sales  ;  and  every  producer 
who  has  anything  that  those  countries  can  be  persuaded 
to  buy  is  interested  in  the  removal  of  all  obstacles.  Such 
a  benefit  is  of  the  same  nature,  for  all  practical  purposes, 
as  the  improvement  of  a  road  between  the  producer  and 
his  market,  enabling  him  to  haul  larger  loads  at  less  cost. 
But  now  the  question  recurs,  How  much  can  you  gain 
from  any  probable  increased  trade  with  South  America  ? 
Will  the  profit  amount  to  anything  like  what  the  McKinley 
law  is  costing  you  on  woven  goods  and  table-ware  ?  On 
that  question  there  is  little  room  for  doubt. 

If  you  had  two  markets,  one  of  which  furnished  a  steady 
demand  for  more  than  half  the  produce  you  brought  for 
sale,  while  in  the  other  you  sold  less  than  a  tenth  of  it, 
to  which  market  would  it  profit  you  most  to  improve 
your  road  and  give  yourselves  easy  access  ?  That  is  the 
very  question  you  have  to  consider.  The  leading  agricul- 
tural exports  from  this  country  (omitting  "  hog  products," 
for  which  separate  data  are  not  furnished)  are  cotton, 
corn,  wheat,  and  wheat-flour.  Of  each  of  these  exports 
England  regularly  takes  the  larger  part  :  between  59  and 


292         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

64  per  cent,  for  an  average  of  the  years  1887- 1889.  But 
when  we  come  to  the  American  countries  we  can  find 
separate  accounts  only  for  Brazil,  Mexico,  Cuba,  and 
Porto  Rico  ;  all  the  rest  of  Spanish  America  taking  so 
little  from  us  that  its  importation  only  forms  a  petty  part 
of  the  "  all  other  countries  "  column.  Summing  up  the  im- 
portations of  these  enumerated  countries,  it  appears  that 
we  send  them  a  fraction  of  one  per  cent,  of  our  exported 
cotton,  less  than  two  per  cent,  of  corn,  a  fraction  of  one 
per  cent,  of  wheat,  and  not  quite  ten  per  cent,  of  wheat- 
flour.  To  give  an  idea  of  the  relative  importance  of 
these  items,  I  give  the  annual  domestic  export  value  in 
millions  of  dollars,  an  average  of  the  same  three  years 
being  taken  :  Cotton,  222  ;  corn,  22  ;  wheat,  63  ;  wheat- 
flour,  51.  The  "hog  product"  value  is  also  63  millions 
per  year,  and  that  of  mineral  oil  — our  only  non-agricul- 
tural export  of  considerable  importance — 43  millions. 
You  can  easily  judge  by  these  figures  which  of  the  two 
markets  is  better  worth  cultivating.  I  am  well  aware 
that  my  Protectionist  adversaries  claim  for  their  policy 
a  power  to  remove  this  disparity — to  raise  our  Spanish- 
American  agricultural  exports  to  something  like  the 
dimensions  of  the  English— but  is  not  their  plan  a  good 
deal  like  that  of  rearing  a  pigeon  into  a  turkey  by  gen- 
erous feeding  ?  Differences  in  the  demand  for  agricultu- 
ral produce  are  more  natural  than  accidental.  Whatever 
change  of  diet  we  gave  to  the  South  American  trade,  we 
could  not  stimulate  a  very  large  demand  for  agricultural 
products  among  them,  for  the  simple  reason  that  those 
nations  are  themselves  agricultural,  and  the  imports  they 
desire  are  manufactures.  If  you  would  follow  the  ad- 
vice I  have  just  suggested,  and  aim  to  improve  your  road 
to  the  best  market,  your  chief  question  will  be,  WJiat 
obstacles   in    the  waj  of  trade   with   Engla)id  remain    to 


PROTECTIOX  AND  AGRICULTURE.  293 

be  removed?  The  answer  is  unquestionably,  The  laivs 
we  have  enacted  to  prevent  the  English  from  paying  11s  for 
what  we  send  them.  Reform  these — stimulate  and  in- 
crease our  trade  with  England,  and  you  will  be  fattening 
your  turkey  instead  of  throwing  away  your  provision  in 
the  wild  endeavor  to  give  an  impossible  growth  to  your 
pigeon.  If  foreign  trade  is  of  value  to  you — and  the 
endeavors  that  the  Republicans  are  making  so  strenu- 
ously in  these  days  for  commercial  arrangements  with 
southern  countries  are  conclusive  proof  that  they  have 
abandoned  the  exclusive  "  home-market  "  position  as  no 
longer  tenable — I  have  shown  you  the  way  to  secure  it. 

The  Nczo  York  Tribune,  leading  organ  of  protection, 
lately  sent  a  trusty  staff  correspondent  to  the  countries 
selected  for  this  "  reciprocity,"  with  the  object  of  working 
up  a  sentiment  in  its  favor.  Here  is  a  sentence  or  two, 
in  which  he  showed  the  reason  why  Cuba,  especially, 
would  be  benefited  by  lower  duties  on  its  imports  from 
us:  "Other  sugar-producing  countries  flourish  because 
they  get  the  full  value  in  exchange  for  their  staple. 
Cuba  languishes  because  it  is  not  allowed  to  buy  freely  in 
the  United  States,  the  only  country  where  its  sugar  can 
be  sold."  The  writer's  intention  is  plain  enough.  He 
wants  us  to  maintain  a  hopeful  attitude  toward  "  reci- 
procity," in  view  of  the  powerful  incentives  that  Cuba  has 
toward  carrying  it  into  effect.  But  is  there  a  man  of  you, 
who  is  not  able  to  read  a  deeper  meaning  into  these  sen- 
tences? Do  they  not  apply  directly  to  yourselves;  do 
you  too  not  languish  because  of  the  laws  that  obstruct 
you  from  buying  freely  in  Great  Britain,  the  only  country 
where  your  breadstuffs,  meats,  and  cotton  can — to  any- 
thing like  the  extent  of  the  surplus  you  produce — be 
sold  ?  The  truths  of  political  economy  will  not  down  ; 
even   the  organs,  whose   one   enduring  purpose   is   their 


294         ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

suppression  and  confusion,  are  sometimes  compelled   to 
recognize  them. 

A    BORROWED    POLICY. 

For  neither  the  reduction  on  sugar,  nor  the  increased 
trade  with  Spanish  America,  considered  in  themselves, 
have  I  a  word  of  censure.  There  is  no  reason  why  I 
should  have  :  however  halting  and  inadequate,  both  are 
steps  in  the  right  direction.  Both  look  toward  a  fuller 
foreign  commerce,  and  better  regard  for  the  purchaser. 
If  their  promoters  think  to  prosper  in  stealing  Democratic 
"thunder" — in  committing  themselves  to  a  policy  which 
can  have  no  sort  of  success  except  by  proving  the  falsity 
of  the  cry  that  "  the  duty  is  paid  by  the  foreigner,"  and 
the  equal  falsity  of  the  other  cry  that  "  the  home  market 
is  all-sufficient  " — it  is  not  for  me  to  advise  against  it. 
My  complaint  is  that  these  doubting,  unwilling  moves,  in 
the  direction  we  are  headed,  are  intended  to  serve  as 
obstacles  to  further  and  more  salutary  progress  in  that 
direction.  Sugar  is  made  free  to  prevent  the  reductions 
of  which  you  are  really  in  need  ;  South  American  trade  is 
encouraged,  in  order  to  keep  you  amused  and  draw  off 
your  attention  from  the  trade  that,  in  your  interest,  ought 
to  be  encouraged.  Nevertheless,  since  the  only  really 
popular  features  of  this  Republican  legislation  are  obvi- 
ously mere  imitations  of  the  policy  of  their  opponents, 
there  can  be  very  little  doubt  that  those  who  can  see 
how  to  grasp  the  substance  will  not  be  very  long  content 
with  the  shadow. 

THE    SUB-TREASURY    AND    LOAN    SCHEMES. 

The  political  party  of  the  "  Farmers'  Alliance  " — for 
although  the  Alliance  at  first  disavowed  the  object  of 
forming    an    independent    party,   and    many   of   its   most 


PROTECTJOX  AND  AGRICULTURE.  295 

prominent  leaders  still  prefer  to  act  with  the  older  par- 
ties, it  has  inevitably  become  such — is  quite  as  active  as 
any.  It  is  largely  made  up  from  your  own  number,  and 
professes  to  be  very  earnest  in  your  interests.  Its  plat- 
form of  principles  is  quite  outspoken  ;  the  farmers  who 
set  it  up  are  evidently  conscious  that  all  is  not  as  it 
should  be  with  them,  and  have  decided  opinions  as  to  the 
remedy. 

Not  all  of  the  Alliance,  perhaps  not  the  majority,  are 
committed  to  the  "sub-treasury"  plan;  but  this  has 
been  so  earnestly  advocated  in  its  councils,  that  some 
attention  must  be  paid  it,  in  any  account  of  the  past 
year's  changes.  If  not  actually  suggested,  it  was  much 
encouraged  by  the  success  of  a  bill  for  compulsory  gov- 
ernment purchases  of  silver  bullion ;  for  the  argument 
was  not  at  all  unreasonable,  that  if  the  silver-producer 
is  entitled  to  so  much  favor,  the  claim  of  the  agriculturist 
is  at  least  equal.  The  sub-treasuries  called  for  in  this 
plan  are  to  be  store-houses  in  bulk  for  all  the  less  perish- 
able products  of  the  soil,  the  government  making  an 
advance  of  eighty  per  cent,  on  their  value  in  money,  at  a 
very  low  rate  of  interest.  Associated  with  this  is  a  land- 
loan  project,  in  which  the  national  government  is  to 
furnish  every  one  able  to  give  good  real  estate  security 
with  any  loan  that  he  may  demand,  at  nominal  interest. 
The  attractive  features  in  these  two  plans  are  combined 
into  a  very  tempting  display.  No  more  compulsory  sales 
of  farm  produce,  while  prices  are  low,  because  the  owner 
must  have  money ;  he  is  to  await  the  price  that  suits  him, 
meanwhile  supplying  his  urgent  needs  by  the  government 
advance,  and  leaving  the  care  of  his  produce  to  the  same 
beneficent  power.  No  more  pinching  want  for  any  who 
have  land  to  pledge;  government  is  to  tide  them  over 
their  temporary  embarrassments  and   luring  them  to  easy 


296         KCO.\'0.\fir  AN  J)   INDUSTRIAL    DELUSIONS. 

times  on  tlic  easiest  of  conditions.  No  more  dependence 
on  the  Shylocks  when  ready  money  has  to  be  had  ;  their 
trade  is  to  be  broken  up,  and  "  innocuous  desuetude"  is  to 
claim  them  for  its  own,  wlien  the  government  takes  the 
loan  business  upon  itself. 

Shall  we  turn  aside  from  these  alluring  pictures,  and 
try  to  form  some  real  practical  common-sense  idea  of 
how  these  plans  would  work,  if  actually  carried  out  ? 
(i)  One  thing  is  indubitably  certain  :  that  if  the  govern- 
ment undertakes  to  furnish  money  on  interest  at  less  than 
the  market  rate,  the  effect  must  be  just  as  if  it  offered 
anything  else  at  less  than  its  price — to  excite  an  eager 
and  exhaustless  demand.  It  will  be  like  passing  a  brand 
new  pension  law,  or  opening  a  tract  of  new  territory 
under  the  Homestead  Act.  Leaving  out  what  is  charged 
for  uncertainty  of  repayment,  the  interest  on  money  is 
equal  to  the  increase  to  be  expected  from  the  expendi- 
ture of  the  money.  It  is  not  an  arbitrary  charge,  and 
not  a  burden  ;  for  if  there  were  no  such  thing  as  interest 
there  would  be  no  surplus  capital — nothing  to  lend,  no 
enterprise,  and  no  advancement.  There  can  be  no  sound 
objection  to  inheriting  property,  for  it  is  well  to  give,  and 
inheritance-gifts  are  the  most  natural.  To  any  one  who 
complains  of  interest  as  unfair,  I  would  put  the  question 
whether,  if  he  traded  a  horse  for  a  wagon,  believing  each 
of  equal  value,  he  would  be  willing  that  the  party  he 
traded  with  should  keep  both  horse  and  Avagon  for  a  year 
without  recompense.  This  would  be  precisely  equiva- 
lent to  lending  money  without  interest.  Interest  of 
course  varies  with  its  market  value,  from  thirty-six  per 
cent,  in  some  new  countries  to  as  low  as  two  per  cent,  in 
Holland;  it  has  generally  declined,  just  as  the  prices  of 
most  manufactured  commodities  have  declined.  There  is 
no  more  danger  of  interest  falling  to  nothing  than  there 


PROTECTION^  AND  AGRICULTURE.  297 

is  of  the  price  of  commodities  falling  to  nothing ;  both 
find  their  level,  and  it  would  be  as  sensible  to  say  that 
because  a  lady's  hands  and  feet  are  pretty  in  proportion  as 
they  are  small  they  would  be  prettiest  cut  off,  as  that  be- 
cause low  interest  is  an  advantage  it  would  be  best  to 
have  none  at  all.  Capital  is  essential  to  progress — an 
unmixedly  good  thing  if  honestly  obtained.  For  the 
common  weal,  the  laws  should  favor  it.  Interest  is  and 
should  be  regulated  by  supply  and  demand.  If  our  gov- 
ernment should  undertake  to  do  better  than  that  for  the 
borrowers — should  offer  cash  at  two  per  cent.,  which 
could  bring  them  four  to  six  per  cent,  if  invested,  a  great 
many  people  might  be  expected  to  snap  at  the  offer. 
(2)  Reckless  speculation  and  heavy  losses  are  no  less 
certain.  Many  investments  will  be  paraded  before  the 
farmer,  as  sure  to  bring  him  in  a  handsome  return  for  his 
two  per  cent,  outlay  ;  he  will  be  strongly  tempted  to  try 
a  "flyer"  in  stocks,  on  money  obtained  so  easily  ;  and  if 
the  courts  of  Wall  Street  and  other  investing  centres  are 
even  now  paved  with  the  remnants  of  departed  fortunes, 
dropped  there  by  men  who  did  not  know  quite  all  they 
fancied  they  knew  of  the  ways  of  the  money  market,  do 
you  believe  that,  under  the  new  loan-regime,  their  tale  of 
victims  could  fail  to  be  richly  reinforced  from  your  own 
calling  ?  It  will  be  a  very  paradise  for  floaters  of  flash 
enterprises.  Their  prey  will  be  guided  into  their  nets 
by  act  of  Congress.  (3)  What  necessarily  follows  ?  The 
government  will  be  saddled  with  thousands  of  bushels  of 
produce,  or  thousands  of  acres  of  land,  which  it  will  have 
to  sell  because  the  depositors  or  mortgageors  cannot 
redeem  them.  This  will  give  opportunity  for  jobs  innu- 
merable :  and  he  is  very  unfamiliar  with  the  recent 
experience  of  our  government  when  in  possession  of 
similar    property,  who    doubts  for  an  instant   that   such 


298         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

sales  must  be  at  a  heavy  loss  to  it.  (4)  The  government 
will  infallibly  be  cheated  in  another  way  :  in  the  appraise- 
ment of  the  valuables  on  which  the  loan  is  made.  The 
appraiser  whose  decision  is  to  determine  the  amount  of 
the  loan  will  be  under  the  strongest  kind  of  temptation 
to  fix  the  value  too  high — and  may  be  expected  in  most 
cases  to  succumb  thereto.  This  will  increase  the  amounts 
of  produce  or  land  finally  thrown  on  the  government. 
(5)  Who  will  pay  the  money  to  be  loaned  ?  It  must 
come  from  labor :  the  charge  must  fall  upon  the  bone 
and  sinew  of  the  country.  I  am  aware  that  it  is  not  pro- 
posed to  raise  the  enormous  fund  which  will  be  called  for 
to  meet  the  contemplated  demand  for  loans,  by  any 
special  tax,  direct  or  indirect — that  to  a  new  issue  of 
greenbacks  will  be  entrusted  the  whole  work  of  satisfying 
this  colossal  appetite  ;  but,  I  am  compelled  to  remind 
you,  that  is  dodging  and  not  answering  the  question. 
Money  can  do  no  good  (except  in  fraudulent  payment 
of  indebtedness)  unless  it  represents  value,  and  value 
cannot  be  given  to  the  proposed  currency  except  by  the 
performance  of  labor :  though  the  dollar  is  of  course  any- 
thing the  government  chooses  to  call  by  that  name,  what 
it  is  worth  to  you  depends  on  the  labor  which  it  has  cost, 
or  which  you  can  command  by  means  of  it.  Assuredly, 
then,  unless  the  Alliance  plans  are  to  result  merely  in  a 
wild  raid  on  public  and  private  credit,  the  whole  vast 
cost  of  the  loans  will  be  borne  by  the  labor  of  the 
country — by  yourselves,  more  than  anybody  else.  (6) 
The  gist  of  the  whole  proposition,  leaving  out  of  view 
the  speculation,  the  failures,  the  cessation  of  honest 
industry,  the  universal  demoralization  in  which  its  adop- 
tion must  result,  was  very  well  put  by  a  shrewd  farmer  of 
Western  New  York :  "  Shall  you  let  the  government  lend 
you  your  own  money  at  two  per  cent,  interest,  or  shall 


PROTECTION  AND  AGRICULTURE.  299 

you  keep  it  yourselves  for  nothing?"  Depend  upon  it. 
whatever  the  government  gives  you,  it  must  first  draw 
from  you.  It  is  an  instrument  worked  by  your  own 
power,  not  an  omnipotent  Providence. 

The  bad  effects  expected  from  the  loan  schemes  favored 
by  the  Alliance  are  no  empty  conjectures  or  theoretical 
speculations.  They  have  been  thoroughly  tested  by  ex- 
perience. Plans  of  the  kind — the  very  same  plans,  in 
some  instances — have  been  tried  again  and  again  ;  some 
here,  some  in  Europe,  some  at  this  very  moment  in  South 
America.  The  record  of  these  experiments  is  uniform, 
unrelieved,  hopeless  failure  in  every  case.  The  French 
scheme  of  "  assignats,"  at  the  time  of  their  Revolution, 
was  of  that  kind.  At  about  the  same  date  land  loans 
were  floated  in  Rhode  Island,  with  some  of  the  disastrous 
results  I  have  sketched.  The  present  financial  troubles  in 
the  Argentine  were  brought  on  in  a  similar  way.  No 
surer  precursor  of  ruin  is  conceivable  than  the  adoption 
of  such  expedients  as  these.  That  human  nature  cannot 
be  trusted  to  use  them  is  a  fact  that  must  be  remembered 
as  long  as  we  have  human  beings  to  deal  with. 

TAMPERING    WITH    THE    CURRENCY. 

The  Farmers'  Alliance,  as  I  have  admitted,  has  not 
agreed  on  the  loan  schemes  just  examined  ;  but  on  one 
point  it  has  quite  decided — a  reform  of  the  currency. 
The  seventy-five  to  eighty  cents'  worth  of  silver  in  a  coin 
which  constituted  the  unit  of  values  in  this  country  until 
1834  (but  was  then  replaced  by  a  gold  unit  as  the  result 
of  a  change  in  the  coinage  laws,  and  has  never  since  been 
accepted  as  our  standard)  is  again  to  become  dominant, 
to  be  called  a  dollar,  and  given  all  the  dollar's  powers, 
while  the  reign  of  gold  is  to  be  brought  to  an  inglorious 
end.     Do  you  fail  to  recognize  this  as  one  of  their  plans? 


300         ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

Well,  they  do  not  express  themselves  in  the  language  I 
have  chosen,  I  admit.  They  call  their  scheme  by  the 
more  attractive  name  of  "  Free  Coinage."  The  meaning 
of  this  is  that  they  would  take  the  control  over  the  vol- 
ume of  our  silver  money  out  of  the  hands  of  the  govern- 
ment, and  give  it  into  the  hands  of  those  who  own  silver 
bullion,  so  that  any  man  with  seventy-five  to  eighty  cents' 
worth  of  silver  can  have  it  made  into  a  dollar,  and  pass  it  as 
a  dollar.  That  is  what  people  like  to  call  the  "  two-metal  " 
standard,  though  I  have  called  it  the  silver  standard  with- 
out qualification  ;  they  probably  take  some  satisfaction  or 
see  some  wit  in  pretending  to  believe  there  can  be  any 
doubt,  any  room  for  two  opinions,  whether  or  not  the  man 
who  has  the  power  to  pay  a  debt  of  one  hundred  cents 
with  seventy-five  to  eighty  cents  will  do  so.  Were  there 
any  doubt  about  such  a  question,  we  might  seriously 
speak  of  a  "  double  standard  " ;  but  as  there  is  none, 
the  expression  is  mere  empty  fooling.  "  Free  coinage  " 
practically  means  a  provision  that  debts  contracted  in 
gold  value  shall  be  paid  in  silver  value,  and  that  the  cred- 
itor shall  be  cheated  out  of  the  difference  between  the 
two.  It  is  because  it  has  that  meaning,  I  deeply  regret 
to  add,  that  so  many  people  find  it  attractive. 

Silver  has  never  been  our  standard  of  values  since  1834, 
I  have  just  said.  It  did  not  cease  to  be  so  by  any  express 
legislation  then  enacted,  for  its  legal  tender  power  and 
the  right  to  have  it  coined  were  not  formally  limited  until 
1853  ;  but  only  by  the  principle  that  those  who  have 
debts  to  pay  will  pay  them  as  cheaply  as  they  can. 
The  act  of  1853  made  no  provision  for  a  silver  dollar, 
because  that  coin  had  been  replaced  by  the  gold  dollar. 
About  1869,  however,  the  coinage  of  silver  dollars  was 
revived,  the  coins  being  at  first  used  altogether  in  foreign 
trade  ;  afterward  the  mines  began  to  turn  out   this  metal 


PROTECTION  AND   AGRICULTURE.  30I 

in  unprecedented  quantities,  so  that  its  value  fell  off ; 
there  was  at  once  seen  to  be  money  for  somebody  in 
passing  as  a  dollar  a  coin  no  longer  worth  a  dollar,  and 
the  silver  question  was  upon  us.  But  never  has  there 
been  a  serious  question  that  gold  was  our  standard  metal. 
During  the  Civil  War,  when  we  had  to  look  to  sales  in  Wall 
Street  to  see  what  our  currency  dollar  was  worth,  it  was 
with  gold  that  we  concerned  ourselves — the  price  of  gold, 
not  of  silver,  was  what  all  the  papers  gave  us.  Whenever 
we  go  beyond  the  domain  of  our  greenbacks,  coin  certifi- 
cates, and  national  bank-notes,  it  is  gold  that  we  take  with 
us.  If  the  Alliance  and  the  silver  owners  persuade  us  to 
go  back  to  a  silver  basis,  they  will  restore  a  monetary 
standard  that  the  country  has  not  known  for  more  than 
half  a  century. 

Now  what  is  your  interest  in  the  silver-coinage  ques- 
tion ?  Many  of  you  owe  money,  and  the  cheaper  dollar 
would  no  doubt  be  a  relief  in  those  cases.  But  for  those 
of  you  who  are  out  of  debt  it  could  be  nothing  but  an 
unmixed  nuisance.  What  you  sell  and  what  you  buy 
would  both  increase  in  price  because  of  the  depreciated 
unit  of  value  ;  but  those  who  sell  to  you  would  take  care 
to  secure  all  the  advantage  of  higher  prices  from  the  first, 
while  those  who  buy  of  you  would  be  considerably  longer 
in  hearing  the  news — that  is  the  way  such  changes  always 
work.  After  a  while,  of  course,  you  would  be  substan- 
tially where  you  were,  in  a  business  way,  only  burdened 
with  your  share  of  responsibility  for  the  government's 
loss  of  credit,  and  with  the  difificulty,  which  always  pre- 
vails in  times  of  repudiated  contracts,  about  getting  such 
money  advances  as  you  might  need.  The  debtors  among 
you  would  suffer  in  the  same  way,  except  for  the  cancel- 
lation of  part  of  their  present  debts  ;  those  would  of 
course  be  made  easier  by  debasing  the  currency,  just  as 


302         ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

they  would  by  a  law  forbidding  attachments,  or  interfer- 
ing with  collections  in  any  way.  No  class  of  our  people 
have  a  stronger  interest  in  the  maintenance  of  a  currency  of 
uniform  excellence  than  those  who  are  poor  or  unlearned 
in  finance.  If  any  kind  of  money  is  worse  than  another, 
that  is  the  kind  which  is  sure  to  be  forced  on  them.  Its 
lesser  value  is  forgotten  at  such  times,  but  is  remembered 
well  enough  when  they  come  to  present  it  in  any  of  their 
payments.  Every  honest  citizen  is  interested  in  keeping 
the  country's  money  all  as  good  as  the  best,  but  none 
more  so   than  yourselves. 

ALLIANCE    OF    THE    "  ALLIANCE  "    WITH    THE    PROTECTIONISTS. 

That  you  have  a  grievance  indeed,  in  the  way  you  are 
treated  by  government,  none  can  be  more  conscious  than 
I.  Long  have  I  been  aware  of  it,  and  strongly,  have  I  in- 
veighed against  it.  But  I  must  urgently  caution  you  to 
be  certain  what  your  grievance  is  before  you  act.  It  may 
not  be  what  you  think  it.  Because  many  rich  men,  many 
men  in  corporations,  many  Eastern  men,  oppose  the  crude 
projectsof  the  Alliance,  it  does  not  necessarily  follow  that 
these  projects  will  be  beneficial  to  agriculture,  or  the  poor, 
or  the  West.  Because  the  Treasury  is  sensitive  to  the 
lightest  word  from  the  bankers,  is  ready  to  fly  to  "  the 
relief  of  Wall  Street  "  whenever  there  is  any  trouble 
there,  while  you  are  aware  of  no  such  complaisance 
toward  yourselves,  it  does  not  necessarily  follow  that 
your  interests  are  a  sacrifice  to  the  Street  and  the  banks. 
For  the  relief  extended  to  them  is  often  a  real  relief,  and 
indirectly  wards  ofT  trouble  from  you  at  the  same  time — 
an  impairment  of  the  general  credit,  for  instance,  in  which 
you  would  yourselves  be  finally  involved,  though  now 
unconscious  of  the  danger — while  the  relief  for  which  so 
many  of  you  are  crying  must  in  the  long  run,  it  is  sin- 


PROTECTION  AND  AGRICULTURE.  303 

cerely  believed  by  those  most  attentive  to  the  teachings 
of  experience,  injure  far  more  than  it  can  benefit  you. 
Your  real  grievance,  and  what  ought  to  be  given  you  for 
its  cure,  I  have  tried  to  tell  in  the  earlier  part  of  this 
letter. 

Any  one  who  calls  away  your  attention  from  this  real 
grievance,  and  from  the  measures  that  ought  to  be  taken 
to  cure  it,  is,  whatever  his  professions,  in  the  service  of 
Protection.  He  who  deliberately  misguides  you  from 
your  true  impregnable  position  into  one  that  is  untena- 
ble, is  a  spy  and  a  traitor,  and  should  be  counted  among 
the  enemy.  If  those  who  suffer  under  the  redoubled 
burdens  of  the  protective  system  can  be  led  off  on  false 
scents,  can  be  encouraged  in  making  demands  whose  folly 
is  so  easy  to  demonstrate  as  to  throw  a  doubt  on  the 
reality  of  their  suffering,  that  mighty  iniquity  may  count 
on  a  longer  lease  of  life.  But  let  us  not  be  misled.  Our 
enemy  is  in  his  last  stronghold,  and  if  we  will  but  keep 
our  view  clear,  our  courage  steadfast,  our  purpose  earnest, 
he  cannot  long  withstand  us. 


CHAPTER  X. 

SPECIAL   DISCUSSIONS. 

The  following  papers,  mainly  reprinted  from  various 
Pennsylvania  and  New  York  journals,  give  a  fuller  treat- 
ment of  several  branches  of  the  tariff  question  (Iron  and 
Steel  Industries,  Raw  Materials,  Drawbacks,  "  Ways  and 
Means ")  than  is  to  be  found  in  the  foregoing  chap- 
ters. A  few  alterations  have  appeared  necessary,  and 
been  made  accordingly,  but  the  papers  are  substantially 
unchanged.  All  were  originally  signed  with  my  own 
name  ;  but  besides  the  generous  and  patriotic  co-operation 
of  Mr.  Atkinson  in  the  first  two,  I  ought,  and  am  glad,  to 
acknowledge  my  brother's  assistance  in  the  preparation 
and  revision  of  the  whole. 

True  Protection  for  the  Iron  and  Steel  Industry. 

This  paper  first  appeared  in  the  Philadelphia  Record  in  April, 
1890,  and  is  a  special  application  of  the  argument  in  Chapter  IV. 
The  fact  that  the  iron  product  for  1890,  here  estimated  "over 
8,000,000  tons,"  actually  exceeded  9,000,000, — though  used  for 
other  purposes  by  the  Protectionists, — is  a  favorable  answer  to 
my  anticipations  for  the  industry,  which  the  more  recent  decline 
is  not  sufficient  to  reverse. 

COMPARISON    OF    BRITISH    AND    AMERICAN    PRICES. 

In  a  recent  article,  the  editor  of  the  Nezv  York  Tribune 
tries  to  break  the  force  of  Mr.  Roger  Q.  Mills'  exposure, 

304 


SPECIAL   DISCUSSIONS. 


305 


in  the  North  America  ft  Revieiv,  of  the  misstatements  of 
Mr.  James  G.  Blaine  in  the  same  periodical,  by  what 
purports  to  be  an  analysis  of  the  prices  of  steel  rails  in 
this  country  and  in  Great  Britain,  The  Tribune,  follow- 
ing its  habit  in  such  cases,  imputes  to  Mr.  Mills  the 
theory  that  because  a  duty  is  placed  upon  a  foreign 
product — steel  rails,  for  instance — the  price  upon  the 
domestic  product  is  advanced  in  equal  measure.  Mr. 
Mills,  it  need  hardly  be  said,  holds  no  such  foolish  idea, 
and  nothing  of  the  kind  can  be  found  in  his  reply  to  Mr. 
Blaine.  What  he  does  hold,  and  prove,  is  that  in  certain 
specific  years  the  price  of  domestic  steel  rails  has  been 
held  above  the  price  in  Great  Britain  in  a  sum  equal 
to  duties  and  freights,  or  even  higher. 


Year. 

U.  S.  Product, 
Tons. 

British 
Price. 

U.S. 
Price. 

Difference. 

Excess  of  Cost. 

1879 

683,965 

$26.88 

$48.25 

$21.37 

$14,616,310 

1880 

954,460 

34-42 

67.40 

32.98 

31,478,090 

1881 

1,330,302 

30.41 

61.13 

30-72 

40,866,877 

1882 

1,438,155 

26.27 

48.50 

22.23 

31,970,185 

1883 

1,286,554 

22.72 

37-75 

15-03 

19,336,906 

1884 

1,116,621 

23.19 

30.75 

7-56 

8,441,654 

1885 

1,074,607 

23.11 

28.50 

5.39 

5,792,131 

1886 

1,763,667 

18.70 

34-50 

15.80 

27,865,386 

1887 

2,354,132 

19.70 

37-08 

17-38 

40,914,814 

i883 

1,552,631 

19-15 

29.83 

10.68 

16,582,099 

Total, 

13,555,094 

$236,864,462 

Since  the  Tribune  has  provoked  the  discussion  it 
becomes  suitable  to  make  use  of  the  comparative  prices 
of  steel  rails  from  1879  ^^  ^^^^  ^^  rejoinder.  These  years 
will  be  chosen  for  treatment  because  in  them  the  prices  in 
both  countries  have  been  upon  a  gold  basis,  all  previous 
comparisons  since  i86t  being  vitiated  by  our  depreciated 
currency. 


306         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

In  this  period  the  Bessemer  rail  production  in  the 
United  States  was  very  heavy,  as  shown  in  the  table. 
The  American  and  British  prices  given  by  the  Tribune  on 
the  authority  of  the  Iron  and  Steel  Association,  and  their 
difference,  are  then  shown,  and  the  excess  of  cost  to  the 
consumers  of   rails   in   this  country   is   easily  computed. 

On  examining  the  Tribune  prices,  I  am  led  to  believe 
that  the  American  price  belongs  to  the  net  ton  of  2,cxx) 
pounds  only.  On  the  other  hand,  since  British  dealings 
are  in  gross  tons,  the  British  price  stated  is  doubtless  the 
price  of  a  gross  ton  of  2,240  pounds.  If  this  exact  allow- 
ance were  made  it  would  add  about  eleven  per  cent. 
to  the  excess.  The  measure  of  the  disadvantage  of  this 
country  is  quite  sufificient,  taking  the  Tribune's  figures  as 
they  are,  and  we  may,  therefore,  dismiss  the  fraction  of 
240  pounds  per  ton  without  further  consideration.  Even 
if  the  correction  were  to  be  made  the  other  way,  the 
excess  paid  in  this  country  would  be  about  $200,000,000 
in  ten  years.  Opponents  may  take  it  so,  and  then  dis- 
prove the  fact,  if  they  can,  that  the  cost  of  building 
up  this  comparatively  petty  branch  of  domestic  industry 
— petty  in  respect  both  to  value  of  product  and  to 
number  of  men  employed  therein — has  been  substan- 
tially as  given  below :  $70,000,000  to  $80,000,000  a  year 
against  the  consumers  of  this  country,  and  in  favor  of  the 
consumers  of  iron  and  steel  who  have  been  supplied 
by  Great  Britain. 

The  total  domestic  production  of  Bessemer  steel  in  this 
period  was  18,907,086  tons.  It  may  be  assumed  that  the 
difference  in  price  on  the  remainder  of  the  steel  has  been 
at  least  equal  to  that  upon  rails.  This  being  computed 
year  by  year  at  the  relative  difference  of  each  year,  adds 
$81,696,361,  making  the  total  difference  in  ten  years, 
between    the    price    of    British   and   American    Bessemer 


SPECIAL   DISCUSSIONS.  307 

metal,  $318,560,813.  If  the  British  mines  and  works 
could  have  supplied  the  United  States  with  18,907,086 
tons  of  Bessemer  metal  between  1879  ^'"^^  1888  inclusive, 
at  British  prices  (as  they  could  not)  it  would  have  cost  us 
$318,560,813  less  than  we  actually  paid.  From  January 
I,  1879,  ^"^  J^ly  I)  1883,  the  duty  on  Bessemer  rails  was 
$28  per  ton  ;  since  July  i,  1883,  it  has  been  $17  per  ton. 
Had  the  whole  rate  of  duty  been  added  to  the  British 
price  on  our  domestic  product  the  disparity  in  the  cost 
of  Bessemer  metal  to  our  customers  would  have  been 
$389,566,177,  but  $71,005,364  more  than  the  actual  dis- 
parity. The  freight  charges  and  insurance  are  computed 
by  the  Tribune  at  $3  per  ton,  or  $56,721,258  in  all,  leav- 
ing for  the  unnecessary  excess  of  cost  of  Bessemer  metal 
in  the  United  States,  as  compared  to  Great  Britain, 
$261,839,555. 

So  much  for  the  cost  of  developing  the  Bessemer  steel 
industry  in  the  United  States  by  means  of  a  tax  on 
British  steel,  on  the  hypothesis  that  must  necessarily  be 
made  if  we  are  to  ascribe  the  development  to  our  customs 
legislation. 

AN    ESTIMATE    OF    THE    TOTAL    COST. 

To  comprehend  the  cost  of  developing  the  production 
of  crude  iron  and  steel  of  all  kinds  in  the  United  States 
from  3,070,885  tons  in  1879  to  over  8,000,000  tons  in 
1890,  a  computation  must  be  made  for  iron  as  well  as  for 
steel.  Our  production  of  pig-iron  was,  from  1879  to  1888 
inclusive,  62,273,470  tons  ;  of  which  about  20,273,470  tons 
may  have  been  converted  into  18,907,686  tons  of  Besse- 
mer rails  and  other  forms  of  that  metal,  leaving  42,000,000 
tons  of  pig-iron  for  other  uses.  Throughout  this  period 
the  average  price  of  American  pig-iron  was  at  least  $10 
per  ton  above   that  of  British   iron  of  the  same  quality 


30.S         F.CONOMTC  AND  INDUSTRIAL   DELUSIONS. 

at  furnace  :  42,000,000  tons  at  $10,  $420,000,000.  A 
freight  charge  of  $3  per  ton  might  have  been  paid,  if 
British  mines  and  works  could  have  supplied  the  quantity 
of  metal,  amounting  to  $126,000,000,  leaving  the  net 
excess  of  price  $294,000,000.     This  gives  us : 

Additional  cost  of  Bessemer  steel,         .  .         $262,000,000 

Additional  cost  of  pig-iron,    ....  294,000,000 


Total,      .......         $556,000,000 

These  figures  confirm  the  estimates  of  Messrs.  Edward 
Atkinson  and  David  A.  Wells,  each  covering  a  slightly 
different  decade  and  computed  on  a  different  basis.  In 
addition  to  our  domestic  product,  however,  we  have 
required  about  17,000,000  tons  of  iron  in  the  years  1879 
to  1888,  which  we  have  imported  in  the  forms  of  ore,  pig, 
bar,  rails,  tin  plates,  machinery,  and  hardware,  and  upon 
which  duties  of  about  $200,000,000  have  been  collected. 
It  therefore  follows  that  if  the  British  or  foreign  mines 
and  works  could  have  supplied  this  country  with  iron  and 
steel  during  the  last  ten  years  under  consideration — -1879 
to  1888— without  any  advance  in  the  prices  in  Great 
Britain,  our  domestic  railways,  mills,  works,  engines,  tools 
and  machinery  would  have  cost  nearly  $800,000,000  less 
than  they  have  cost ;  or  $80,000,000  a  year. 

The  entire  capital  in  all  the  blast  furnaces,  rolling  mills 
and  steel  works  of  the  United  States  in  1880  was  only 
$231,000,000,  and  probably  does  not  now  exceed 
$400,000,000.  The  ten  years'  excess  of  cost,  on  every- 
thing into  which  iron  and  steel  have  entered  as  com- 
ponent materials  in  this  country,  as  compared  to  other 
countries,  must  therefore  have  been  double  the  capital 
now  invested  in  all  the  works  where  these  crude  materials 
are  produced. 


SPECIAL   DISCUSSIONS.  309 

FEEBLE    PLEA    FOR    THE    DUTIES. 

'*  But,"  says  the  advocate  of  the  system,  "  have  we  not 
reduced  the  prices  of  iron  and  steel  by  protection  to  these 
industries  ?  "  This  is  the  sole  justification  attempted  by 
the  Tribtme  &  Co.  for  the  duties  on  iron  and  steel ;  yet 
they  dare  not  present  that  argument  to  the  farmers  in 
defence  of  the  duties  on  farm  products.  I  challenge  the 
Tribune  to  say  to  the  farmers  or  wool  growers  that  the 
object  and  intention  of  the  duty  on  wool  has  been  to 
lower  the  price  of  domestic  wool.  Such  has  been  the 
effect  upon  American  wool,  to  be  sure,  but  the  advocates 
of  duties  on  wool  dare  neither  admit  the  fact  nor  jus- 
tify it.  They  call  attention  carefully  away  from  the  fall- 
ing off  in  domestic  manufacturing,  which  the  scarcity  of 
material  has  brought  about,  and  the  consequent  dimin- 
ished demand  for  United  States  wool  to  mix  with  the 
coarser  foreign  wools. 

In  the  Tribune  article,  and  in  almost  every  attempted 
defence  of  the  taxation  of  foreign  iron  and  steel,  we  are 
told  that  their  prices  have  been  reduced  in  this  country 
by  protection.  But  the  course  of  prices  with  us  has  been 
anticipated  in  Great  Britain,  down  to  a  very  recent  period. 
Almost  ever  since  the  specie  standard  was  re-established 
in  this  country,  or  from  the  beginning  of  1880  to  1889, 
there  has  been  a  progressive  reduction  in  the  price  of  pig- 
iron  in  the  United  States.  But  from  1880  to  1889  there 
has  also  been  as  steady  and  progressive,  and  even  a  greater, 
reduction  in  the  price  of  pig-iron  in  Great  Britain,  subject 
to  occasional  upward  fluctuations.  Now,  if  this  reduction 
can  be  attributed  to  protection  in  the  United  States,  why 
has  it  not  been  due  to  free  trade  in  Great  Britain  ?  The 
whole  argument,  used  only  with  those  kept  in  ignorance  of 
British  prices,  is  based  on   a  fallacy,  a  delusion,  or  a  lie. 


3IO         ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

The  decrease  has  in  fact  been  due  to  a  complete  revolu- 
tion in  every  branch  of  the  art  by  which  the  iron  and 
steel  have  been  produced  ;  and,  as  usual,  it  has  been 
accompanied  by  a  rise  in  wages.  Cost,  wages,  and  prices 
have  fluctuated  from  time  to  time,  but  both  cost  and 
prices  were  very  much  lower  in  1889  than  in  1879,  '^"^ 
wages  were  higher  not  only  in  the  United  States  but  also 
in  Great  Britain,  in  Germany,  in  France,  and  in  Belgium. 

CHANGES   OF    PROFOUND    SIGNIFICANCE. 

The  result  of  all  these  changes  is  one  of  profound  sig- 
nificance. Great  Britain  has  lost  her  supremacy  in  the 
production  of  iron  and  steel,  and  the  United  States  have 
assumed  it.  The  reasons  for  this  are  not  far  to  seek,  and 
may  be  stated  in  a  very  few  words  : 

First.  The  supply  of  fine  ore  suitable  for  the  manufac- 
ture of  Bessemer  metal  and  crucible  or  open-hearth  steel 
is  very  limited,  and  the  Spanish  deposits  from  which  large 
supplies  have  been  derived  are  nearly  exhausted.  Eng- 
land is  looking  toward  the  south  of  Spain,  inside  the 
gates  of  Gibraltar,  and  to  the  north  of  Sweden,  at  a 
point  over  two  hundred  miles  from  the  northern  end  of 
the  Baltic  Sea,  for  the  possibility  of  keeping  up  her  fine 
steel  works.  The  supply  of  ores  for  common  pig-iron 
and  for  "  basic  "  steel  remains  ample,  but  such  a  one- 
sided supply  will  not  suffice  to  maintain  her  previous 
position. 

Second.  The  available  British  supply  of  coal  suitable 
for  conversion  into  coke  is  now  worked  at  very  high  cost, 
low  wages,  and  small  product.  The  Durham  mines,  which 
yield  the  larger  part  of  the  coke,  are  at  a  great  depth,  the 
veins  horizontal  and  only  two  feet  in  height.  Miners  are 
therefore  obliged  to  lie  on  their  sides  and  to  work  in  a 


SPECIAL   DISCUSSIONS.  311 

foul  atmosphere  at  an  excessive  temperature.  The  presi- 
dent of  the  Iron  and  Steel  Institute  of  Great  Britain 
sounds  the  cry  of  alarm  in  his  last  address  over  future 
supplies  of  fine  ore.  Under  these  conditions  the  exces- 
sive prices  of  coke,  now  three  times  as  high  in  Durham  as 
they  are  in  Western  Pennsylvania,'  are  readily  explained. 
The  time  has  now  come  when  the  United  States  should 
naturally  be  called  upon  to  supply  the  iron-works  of 
Great  Britain  with  pig-iron  in  large  quantities,  just  as 
the  colonies  of  America  supplied  them  in  the  middle  of 
last  century.  Then,  just  as  the  development  of  the  iron 
and  steel  industry  in  Great  Britain,  a  century  since,  made 
her  the  richest  and  most  powerful  nation,  and  enabled  her 
to  gain  control  of  the  commerce  of  the  world,  although 
numbering  but  10,000,000  to  12,000,000  people,  so  the 
lead  now  assured  to  us  in  the  production  not  only  of  iron 
and  steel,  but  of  copper  and  lead,  will  give  us  the  com- 
mand of  the  commerce  of  the  world  when  we  are  willing 
to  grasp  it. 

A    PERTINENT    QUESTION    REPEATED. 

Mr.  William  M.  Grosvenor,  in  his  work  entitled  "  Does 
Protection  Protect  ?  "  after  showing  the  progress  in  the 
production  of  iron  and  steel,  and  the  prosperity  which 
these  arts  had  attained,  before  the  Revolution  (a  demon- 
stration which  is  fully  sustained  by  Mr.  James  M.  Swank, 
Secretary  of  the  Iron  and  Steel  Association,  in  his  special 
report  for  the  census  of  1880)  asked  these  pertinent  ques- 
tions as  early  as  1871  : 

"  If  this  manufacture  (of  iron  and  steel)  has  had  such 
natural  advantages  that  in  its  very  infancy  it  alarmed 
English  manufacturers  of  the  higher  grades,  and   though 

'  The  facts  about  coke  can  be  found  in  the  reports  upon  this  inthistry  by 
Mr.  Joseph  D.  Weeks,  of  Pittsburg. 
24 


312  ECONOMIC  AND    INDUSTRfAL    DELUSIONS. 

exposed  to  wholly  unchecked  competition  with  foreign 
industry,  actually  advanced  with  such  vigor  and  rapidity 
before  the  adoption  of  any  tariff  laws  whatever  as  to 
produce  bars  for  exportation,  machines  unmatched  in  ex- 
cellence, implements  of  acknowledged  superiority,  and 
scythes  and  axes  equal  to  the  best  of  European  make, 
is  it  not  the  height  of  folly  to  say  that  it  would  never 
have  existed,  or  could  not  now  be  sustained,  without  pro- 
tective duties  ?  " 

Mr.  Grosvenor  relates  that  prior  to  1750  the  iron  im- 
ported into  England  "  had  been  subject  to  a  duty  of  3^. 
9^.  a  ton  ;  and  when  it  was  proposed  to  repeal  this  impost 
and  to  admit  American  iron  free,  the  ironmasters  pro- 
tested that  their  works  at  Shef^eld  and  elsewhere,  erected 
at  great  expense,  would  be  ruined,  the  laborers  would  be 
rendered  destitute  or  forced  to  emigrate."  He  then 
remarks  :  "  How  often  have  we  heard  from  American 
lips  the  same  dismal  prophecies  !  It  is  the  old  cry  of 
threatened  monopoly,  pleading  anxious  regard  for  the 
welfare  of  labor.  Were  these  men  honest  ?  Every  bit 
as  honest  as  the  men  who  say  that  American  furnaces 
would  now  be  closed  by  the  repeal  of  duties  on  pig-iron  ! 

"  What  then  has  been  the  effect  of  the  protective  sys- 
tem ?  Simply  to  put  money  into  the  pockets  of  those 
who  smelt  iron,  to  the  disadvantage  of  all  iron-workers, 
and  at  the  expense  of  the  whole  nation." 

This  statement  is  commended  to  the  Nczv  York  Trib- 
une, and  I  venture  to  suggest  that  as  this  same  William 
M.  Grosvenor  is  now  on  its  staff  he  should  be  invited  to 
disprove  his  own  indictment  of  the  policy  of  privation, 
which  he  now  advocates  under  the  guise  of  protection. 

PRETENCES  EXPOSED  BY  CENSUS  RETURNS. 

How  utterly  false  the  pretences  under  which  a  privation 
of  foreign  iron  has  been  imposed  upon  this  country  for  the 


SPECIAL    DISCUSSIONS.  313 

alleged  benefit  of  the  workmen,  has  nowhere  been  so  con- 
clusively proved  as  in  the  census  returns  of  1880,  and  Mr. 
Swank's  report  upon  the  iron  and  steel  industry.  As  this 
matter  is  of  more  importance  to  the  State  of  Pennsylva- 
nia than  to  any  other  State,  the  following  data  (from  the 
sworn  returns  of  representatives  of  all  the  mines,  blast 
furnaces,  and  coke  ovens,  compiled  by  their  own  chosen 
experts  in  the  census  reports)  will  be  limited  to  our  own 
statistics;  but  it  may  be  remembered  that  in  1880  we 
produced  one  half  the  iron  of  the  country,  and  that  we 
still  hold  the  leading  place  : 


Employes  in  iron  mines 
Employes  in  anthracite  mines 
Employes  in  bituminous  coal  mines 
Employes  in  coke  ovens 
Employes  in  blast  furnaces  . 


Add  for  work  in   limestone  quarries, 
etc.,  at  same  average  wages  . 

Total      .         .         .         .         . 


Number. 

IVagfs. 

.       8,733 

$ 

2,192,167 

•       5>ooo 

1,600,000 

•       3,300 

1,089,000 

1,100 

440,000 

•     13.460 

4,752,838 

31,593 

10,074,005 

3,407 


1,089,833 


35,000     $11,163,838 


This  shows  that  35,000  men  and  boys  earned  $320  each, 
in  an  arduous  and  undesirable  work  which  gave  them 
precarious  employment  for  about  nine  months  out  of 
the  twelve.  Since  1880  our  production  has  about  doubled, 
work  is  more  continuous,  wages  a  little  higher,  cost  some- 
what lower,  and  conditions  a  little  more  favorable. 

As  the  artisans  of  Pennsylvania  are  the  largest  con- 
sumers of  iron  in  the  Union,  they  have  had  to  pay 
roundly  for  the  development  of  the  pig-iron  industry  of 
their  State.  The  price  of  protection  or  privation  of  pig- 
iron   was   above   computed  at  about  $80,000,000  a  year. 


314         ECONOMIC  AND  INDUSTRIAL    DELUSIONS. 

Our  consumers  in  Pennsylvania  have  paid  at  least  one 
half  this  sum  in  the  increased  price  of  our  crude  iron  and 
steel,  over  that  to  the  consumers  who  have  been  supplied 
by  British  mines  and  furnaces.  It  has,  therefore,  cost  us 
$40,000,000  a  year,  each  year  for  ten  years,  to  enable  our 
ironmasters  (what  a  suitable  title,  forsooth  \)  to  pay  out 
$11,000,000  to  $20,000,000  in  wages  at  $320  to  $400  per 
man. 

AMERICA    COULD    HAVE    MASTERED    THE    WORLD. 

"  But,"  says  the  advocate  of  Privation,  "  if  the  mines 
and  furnaces  of  Pennsylvania  had  not  been  developed, 
would  not  the  price  of  iron  have  been  a  great  deal  higher 
in  Great  Britain?"  To  which  I  simply  reply:  Of  course 
it  would  ;  and  what  would  the  consequence  have  been  ? 
In  that  case  the  present  scarcity  of  ores  and  coal  in  Great 
Britain  would  have  been  manifest  a  dozen  years  ago  ;  the 
cost  of  crude  materials  for  making  rails,  building  steamers, 
engines,  machinery,  and  tools  of  every  kind  would  have 
been  the  same  on  both  sides  of  the  ocean  (allowance 
being  made  for  freight),  and  we,  instead  of  the  British, 
would  already  have  become  the  greatest  constructors  of 
steamers,  machinery,  and  tools  in  the  world. 

We  already  consume  three  hundred  pounds  of  iron 
per  head,  almost  forty  per  cent,  of  the  iron  product  of  the 
civilized  world.  When  railway  building  starts  up  again 
next  year  we  shall  consume  more  than  forty  per  cent. 
Great  Britain  cannot  meet  even  the  present  demand  upon 
her  mines  and  works,  without  any  addition  to  it  from  us. 
The  extension  of  railway  and  steamship  communication 
is  developing  an  increasing  demand  for  iron  in  Asia, 
Africa,  South  and  Central  America,  and  Australia,  which 
no  other  country  except  the  United  States  can  supply. 
The    one    measure    needed    in    order   to    establish   this 


SPECIAL   DISCUSSIONS.  315 

supremacy  for  all  time  is  to  repeal  every  duty  or  tax 
upon  ores,  coal,  metal,  machinery,  and  tools  of  every  de- 
scription ;  break  down  the  disparity  in  prices ;  hold  the 
cost  and  wages  of  Great  Britain  where  they  are,  and  then 
beat  her  at  every  point  by  our  own  superiority  of  con- 
ditions. 

Even  under  all  the  disadvantages  to  which  my  own 
business  has  been  subjected,  our  export  trade  is  a  warrant 
for  these  views.  Our  works  are  making  and  sending  to 
South  America  tens  of  thousands  of  plows  and  other 
agricultural  implements  and  machines,  many  of  them 
wholly  of  iron  and  steel,  thus  aiding  the  farmers  there  to 
turn  their  sheep  pastures  into  wheat-fields,  and  become 
competitors  to  North  American  wheat-growers  in  the 
European  market.  A  refusal  to  take  South  American 
wool  thus  brings  other  hardships  upon  our  suffering 
farmers  besides  that  of  dearer  clothes,  blankets,  and  car- 
pets. We  also  ship  to  Canada,  Europe,  Australia,  and 
Africa. 

Now,  is  it  not  self-evident  that,  since  we  can  manufac- 
ture here  and  export,  in  competition  with  the  world, 
every  kind  of  implement  and  machine,  we  can  only  desire 
protection  to  support  us  in  imposing  higher  prices  upon 
consumers  at  home?  But  this  advantage  to  the  manu- 
facturer is  more  than  counterbalanced  by  the  tariff  laws, 
which  bear  with  peculiar  severity  upon  exporters.  Until 
President  Cleveland's  great  message  of  1887  revived  our 
hope  that  a  reform  might  ultimately  come,  I  was  even 
ready  to  try  subsidies  as  a  last  resort  or  makeshift  to 
revive  our  commerce.  A  tallow  dip  is  better  than  total 
darkness,  but  with  the  dawn  of  day  the  candle  is  laid 
aside.  The  subject  has  a  very  different  aspect  now  from 
the  one  it  wore  before  Cleveland's  message  of  promise. 
With  free  ships  and  enlightened  navigation  laws,  free  raw 


31 6         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

materials,  and  a  tariff  for  revenue  only  (like  that  of  1857) 
our  manufacturers  would  rise  superior  to  protection,  our 
flag  would  again  float  upon  every  sea,  our  ships  be  filled 
with  steady  work,  necessarily  to  be  paid  for  with  good 
wages. 

OTHER    INDUSTRIES   OPPRESSED. 

Many  other  branches  of  industry  in  Pennsylvania  have 
been  similarly  oppressed  by  this  tax  upon  their  materials. 
All  men  are  consumers  of  iron  and  steel  in  one  sense, 
since  these  metals  are  necessary  in  every  branch  of  pro- 
duction ;  hence  all  are  taxed  when  these  crude  materials 
are  taxed.  In  the  year  1880  in  Pennsylvania  1,456,067 
men  and  women  were  occupied  for  gain  out  of  about 
4,250,000;  now  about  1,800,000  out  of  5,250,000.  Not 
one  in  ten  of  these  could  be  subjected  to  foreign  competi- 
tion had  there  never  been  a  protective  tariff ;  and  out  of 
this  grand  total  only  35,000  got  their  meagre  living  in  the 
production  of  pig-iron.  This  is  easily  proved.  The  occu- 
pations in  Pennsylvania  in  1880  were  : 

Farmers  and  farm  laborers,  301,1 12.  Only  a  little  wool, 
potatoes,  and  tobacco  could  be  imported  in  competition 
with  them  were  there  no  tariff ;  while  they  were  all  taxed 
on  their  railway  transportation,  their  farm  tools,  their  tin 
cans,  their  clothes,  and  much  else. 

Persons  engaged  in  professional  and  personal  service, 
446,713.  No  foreign  product  could  be  imported  to  inter- 
fere with  them  ;  yet  all  were  taxed  on  their  iron  and 
steel. 

Trade  and  transportation  gave  employment  to  179,965. 
If  free  iron  gave  more  material  at  less  cost,  their  work 
would  be  increased  and   not  diminished. 

Manufacturing,  mechanical,  and  mining  industries  gave 
occupation  to  528,277,  of  whom  35,000  were  engaged  in 


SPECIAL   DISCUSSIONS.  317 

the  production  of  pig-iron.  Including  every  person  occu- 
pied in  these  industries,  a  part  of  whose  product  could  be 
imported,  not  over  one  third  could  be  named.  All  the 
rest  are  taxed  without  recompense.' 

PROTECTING    FOREIGNERS    AT    OUR    OWN    EXPENSE. 

Whether  by  means  of  "  protection  "  or  in  spite  of  priva- 
tion, the  world's  production  is  now  insufficient  for  the 
numberless  uses  to  which  iron  could  be  put  in  this  coun- 
try. We  have  steadily  protected  the  workers  of  iron  in 
Great  Britain  and  Germany  at  the  cost  of  our  own,  by 
taxing  our  own  iron  while  theirs  has  been  free  :  their 
iron  has  been  relatively  low  in  cost  while  ours  has  been 
high,  whatever  the  actual  prices  may  have  been.  We 
have  given  them  the  trade  of  the  world,  and  have  not 
even  held  our  own.  No  first-class  textile  factory  can 
now  be  built  in  this  country  unless  it  is  in  considerable 
part  supplied  with  foreign  machinery  ;  while  foreign  tex- 
tile fabrics  more  and  more  displace  our  own.  This  is 
due  to  our  taxes  on  iron,  steel,  wool,  and  dyes. 

In  spite  of  all  the  advantages  we  have  thrown  away,  our 
natural  superiority  in  iron  ores,  coal,  and  coke  has  at  last 
gained  us  supremacy.  Since  1889  the  incapacity  of 
Europe  to  supply  the  demand  of  the  world  for  iron  and 
steel  has  been  demonstrated.  All  that  is  now  needed  to 
give  the  United  States  the  paramount  position  in  com- 
merce is  free  trade  in  crude  materials  and  in  the  partly 
manufactured  articles  required  for  our  domestic  industry. 
Revenue  duties  on  other  imports,  and  a  tax  on  intoxi- 
cants and  tobacco,  will  then  suffice  to  meet  all  our 
expenses. 

'  See  Census  of  1880,  and  also  the  "  Analysis  of  the  Industries  of  Penn- 
sylvania," in  that  remarkably  comprehensive  work,  "The  Distribution  of 
Products,"  by  Edward  Atkinson,  for  further  development  of  this  argument. 


31 8         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

Finally,  in  order  to  protect  all  interests  in  the  most 
equitable  and  effective  manner,  we  must  equalize  our 
prices  of  all  crude  or  partly  manufactured  materials  of 
manufacturing  with  those  of  Great  Britain.  We  need 
free  ore,jrfree  iron,  free  wool,  free  wood,  free  dyestuffs,  and 
the  like  ;  then  we  can  manufacture  at  high  wages  and  low 
cost,  and  no  other  country  can  compete  with  us — espe- 
cially no  country  in  which  so  costly  a  luxury  as  "  pauper 
labor  "  prevails. 

The  Tin-Plate  Question. 

(Printed  in  the  Philadelphia  Record,  June,  1890.) 

The  reason  or  unreason  for  which  the  duty  on  tin  plate 
is  to  be  heavily  advanced  by  the  McKinley  Bill,  is  the  asser- 
tion that  the  United  States  would  gain  more  than  the  cost 
of  this  tax  by  establishing  a  home  manufacture  of  tin  plate. 
The  matter  has  never  been  analyzed  in  a  business-like 
manner.  This  tax  and  others  are  justified  purely  on 
theoretic  grounds,  to  wit :  Anything  which  can  be  made 
in  this  country  ought  to  be  made  in  this  country,  no 
matter  at  what  cost  to  the  consumers.  That  is  the  theory 
of  "  Protection  with  incidental  revenue,"  advanced  by  Mr. 
W.  McKinley. 

THE  CASE  AS  IT  STANDS. 

It  is  time  to  state  this  tin-plate  problem  in  facts  and 
figures.  Disregarding  small  fractions,  the  case  stands  as 
follows : 

In  the  last  two  or  three  fiscal  years  we  annually  im- 
ported tin  plate  of  which  the  declared  value  averaged 
$21,000,000;  the  tax  assessed  thereon  yielded  $7,280,000. 
It  is  proposed  to  increase  the  duty  from  i  cent  to  2^ 


SPECIAL   DISCUSSIONS.  319 

cents  per  pound.  This  would  add  $8,736,000  to  the  tax, 
making  the  total  tax  $16,016,000.  The  cost  of  tin  plate 
which  might  be  had  for  $21,000,000,  with  a  small  amount 
added  for  freight,  would  then  be  $37,000,000  a  year,  if 
this  act  should  become  law.  There  would  certainly  be 
some  falling  off  in  the  use  of  tinware,  following  so  marked 
an  advance  in  the  cost ;  but  we  may  suppose,  for  the 
present,  that  this  is  to  be  offset  by  the  increased  demand 
of  an  increasing  population. 

It  has  taken  generations  to  establish  the  art  of  dipping 
sheet  metal  into  tin  in  Wales,  where  is  found  an  inherited 
aptitude  for  this  low  grade  of  hand-work,  conducted  under 
bad  conditions  of  life,  at  low  rates  of  wages.  A  compara- 
tively small  number  are  engaged  in  making  all  the  tin 
plate  used  in  the  world — not  exceeding  30,000 — starting 
from  the  naked  bars.  Children  are  employed,  and  girls 
between  the  ages  of  12  and  14.  These  poor  little  waifs 
carry  full  boxes  of  tin,  weighing  108  pounds,  resting  them 
on  their  hips  when  their  arms  are  not  strong  enough.  A 
portion  of  the  work  is  very  unhealthy.  In  the  pickling- 
rooms  the  employes  lose  their  teeth  and  are  otherwise  so 
disfigured  as  to  appear  more  like  beasts  than  men.  The 
rank  odor  of  the  oils  used  is  very  unpleasant. 

How  long  would  it  take  to  establish  tin-plate  works  in 
this  country,  so  that  domestic  competition  would  reduce 
the  cost  of  tin  plates  now  required  from  $37,000,000  to 
$21,000,000.?     Mr.  McKinley  will  kindly  inform  us. 

A  better  form  of  this  problem  would  be  to  put  it  in 
terms  of  exchange,  for  we  would  thus  have  it  as  it  really 
is.  As  a  matter  of  fact,  we  now  buy  our  tin  plate  in 
England,  in  exchange  mainly  for  cotton  and  wheat.  Our 
$2ipoo,ooo  worth  of  plates  at  their  cost  price  in  England 
may  be  held  to  represent  $12,000,000  worth  of  cotton  at 
$50  a  bale  (240,000  bales)  plus  $9,000,000  worth  of  wheat 


320         F.COA'OMIC  AND   INDUSTRIAL    DRLUSIONS. 

at  90  cents  :i  bushel  (io,CK)0,ooo  bushels).  A  market  in 
Great  Britain  is  thus  established  by  our  purchase  of  tin- 
plate  there,  for  240,000  bales  of  cotton  and  10,000,000 
bushels  of  wheat,  in  exchange  for  $21,000,000  worth  of 
tin  plates,  which  are  to  some  extent,  as  we  have  seen,  the 
product  of  a  class  of  laborers  verging  on  pauperism. 

The  cost  of  the  tin  cans  and  tin  boxes  made  of  this 
plate  is  so  large  in  proportion  to  the  cost  of  the  fruit,  fish, 
meat,  crackers,  and  other  articles  of  food  which  are  packed 
in  them  as  to  make  even  the  tax  now  imposed  a  very 
important  factor.  If  it  were  not  for  the  present  tax  on 
tin  plate  we  could  export  much  larger  quantities  of 
crackers,  fish,  fruit,  and  meat  than  we  now  do.  In  conse- 
quence of  this  tax  English  and  French  farm  products, 
packed  in  tin  cans  free  of  tax,  are  sent  all  over  the  world  ; 
for  we  have  deliberately  and  designedly  handicapped  our- 
selves in  the  competition.  If  the  present  tax  should  be 
removed,  and  tin  plate  could  be  had  at  prime  cost,  we 
should  import  more  of  it  in  exchange  for  a  larger  quantity 
of  cotton  and  wheat ;  and  we  should  also  establish  a  larger 
market  for  domestic  farm  products  by  exporting  them  in 
tin  packages. 

The  addition  of  $8,736,000  of  tax  would  increase  the 
cost  of  tin  plate  to  the  consumers  of  this  country,  and 
would  tend  yet  more  to  prevent  the  export  of  provisions 
in  cans,  and  of  bread  and  other  food  in  boxes. 

I 

A  FALLACIOUS  PLEA. 

The  plea  for  this  particular  tax  is  that  it  would  enable 
some  one  to  make  tin  plate  in  this  country,  whether  com- 
petent or  otherwise,  and  that  then  a  home  market  (for 
home  consumption,  and  not  for  export)  would  be  created 
by  setting  a  large  number  of  persons  at  work — who  are 


SPECIAL   DISCUSSIONS.  321 

now  occupied  in  that  art  in  Wales — in  this  country  to 
make  tin  plate.  The  extent  of  such  a  home  market  may 
be  readily  measured.  In  order  to  measure  it,  it  may  be 
admitted  that  the  greater  part  of  the  price  of  tin  plate  is 
paid  to  the  workmen  in  the  iron  mines,  rolling-mills,  and 
tin  works  from  which  the  product  is  derived.  But  no  one 
conversant  with  the  art  would  question  the  fact  that  at 
least  lo  per  cent,  of  the  price  must  be  set  aside  for  the 
profits  of  the  business,  the  royalties  for  the  owners  of  the 
mines,  and  the  general  expenses,  insurance,  and  taxes  ; 
leaving  90  per  cent,  at  the  utmost  as  a  wage  fund ; 
$21,000,000  less  10  per  cent,  leaves  $18,900,000  for  the 
compensation  of  the  workmen,  most  of  whom  would  have 
to  be  imported  from  Wales  in  order  to  establish  this 
branch  of  industry  in  our  country. 

The  average  earnings  of  all  who  were  engaged  in  min- 
ing iron  ore  and  coal,  and  in  converting  coal  and  ore  into 
the  finished  sheets  and  bars  of  iron  in  this  country  in  1880 
was  less  than  $400  each.  The  men  who  might  undertake 
to  establish  this  art  would  not,  of  course,  pay  any  higher 
rates  of  wages — or  rates  above  the  average  in  other 
branches  of  work  of  like  kind.  If,  then,  we  divide  $18,- 
900,000  by  $400  each,  we  find  that  the  total  force  which 
would  be  required  to  make  tin  plate  in  this  country, 
counting  from  the  ore  to  finished  product,  Avould  number 
47,250.  But  wages  have  advanced  a  little  since  1880; 
and  in  order  to  entice  workmen  from  other  branches  of 
work  into  this  undesirable  employment  it  might  become 
necessary  to  pay  $500  each.  In  that  case  the  number  of 
workmen  represented  by  the  value  of  the  tin  plate  im- 
ported, less  10  per  cent.,  would  be  37,800. 

Let  us  concede  another  point :  that  the  tax  of  $16,000,- 
000,  in  addition  to  the  present  cost,  would  be  mainly  paid 
out  to  workmen.      Assuming  that  the  cost  of  tin  plate 


322         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

to  the  consumers  of  this  country  would  be  advanced  from 
$21,000,000  to  $37,000,000;  that  10  per  cent,  of  the  $37,- 
000,000  would  sufifice  for  profits,  wages,  royalties,  taxes, 
and  general  expenses, — we  then  have  a  wage  fund  to  be 
paid  out  in  the  United  States  to  tin  plate  makers  at  the 
cost  of  the  consumers  of  tin  plate  of  $33,300,000,  which 
at  $500  each  would  represent  the  work  of  66,600  men  and 
boys. 

In  order  to  prove  exactly  what  the  home  market  for 
farm  products  would  be  in  supplying  66,600  men  and 
their  families — the  maximum  which  can  be  claimed  as  the 
force  required  to  conduct  this  branch  of  industry  here — 
we  should  multiply  the  number  of  workmen  by  three,  as 
it  is  the  established  rule  that  each  workman  who  earns 
$400  to  $500  a  year  supports  two  others.  We  should 
then  have  a  group  of  199,800  men,  women,  and  children 
supported  at  the  cost  of  the  consumers  of  tin  plate  in  this 
country,  as  a  result  of  establishing  the  manufacture  in 
this  manner. 

The  average  consumption  of  flour  to  each  person  is  one 
barrel  a  year.  Taking  the  maximum  of  five  bushels  of 
wheat  to  a  barrel  of  flour,  the  home  consumption  of  this 
body  of  workmen  would  be  999,000  bushels  of  wheat. 
The  average  consumption  of  cotton  in  this  country  is 
about  fifteen  pounds.  The  home  market  for  cotton  de- 
veloped by  this  art  would,  therefore,  come  to  very  nearly 
6,000  bales  a  year.  The  rest  of  the  wages  would,  of  course, 
be  spent  for  other  kinds  of  food  and  for  fuel,  clothing,  and 
shelter.  The  effect,  however,  would  be  to  reduce  the  de- 
mand for  the  cotton  and  wheat  with  which  we  now  pay 
for  tin  plate  in  Great  Britain  from  over  240,000  bales  of 
cotton  to  6,000,  and  from  10,000,000  bushels  of  wheat  to 
1,000,000  bushels. 

Of    course   there   would    be   a  little  more   demand   for 


SPECIAL   DISCUSSIONS.  323 

meat,  clothing,  and  shelter,  which  to  some  extent  would 
compensate  farmers  for  the  loss  of  market  suffered  by 
growers  of  wheat  and  cotton.  These  adjustments  would 
all  be  made  in  time.  But  what  would  be  the  immediate 
effect  ?  Would  it  not  be  the  same  that  follows  all  such 
futile  attempts  to  turn  capital  and  labor  by  force  of  law 
into  directions  which  competent  persons  do  not  care  to 
follow,  and,  therefore,  to  put  great  branches  of  industry 
at  the  hazard  of  incompetent  persons,  who  are  thus  taken 
into  partnership  by  the  government  at  the  expense  of  the 
taxpayers  ? 

THE    WORKMEN    WOULD    BE    IMPORTED. 

The  promoters  of  this  scheme  for  taxing  the  public  on 
one  of  the  most  essential  articles  in  use  have  talked  indefi- 
nitely about  a  huge  force  of  idle  people  who  would  be  set 
to  work  if  this  art  should  be  established  in  our  country. 
We  have  measured  this  "  huge  force  "  at  its  maximum. 
The  idle  people  in  this  country,  as  is  well  known  to  those 
who  know  them,  would  not  be  capable  of  doing  this  work. 
The  workmen  would,  of  necessity,  be  imported  in  spite 
of  the  Alien  Contract  Labor  law.  The  farmers  would  be 
deprived  of  a  great  market  for  cotton  and  wheat,  and  the 
country  would  be  taxed  $'16,000,000,  in  order  to  set  peo- 
ple at  work  in  a  branch  of  business  for  which  they  show 
no  capacity ;  about  which,  I  should  add,  they  must  be 
absolutely  ignorant,  if  they  believe  the  statements  which 
have  been  submitted  in  order  to  justify  the  tax. 

It  is,  however,  absurd  to  suppose  that  the  promoters  of 
this  scheme  for  making  tin  plate  in  this  country,  who  want 
to  support  themselves  by  taxing  the  consumers,  have  any 
idea  of  being  content  with  a  normal  profit  of  10  per  cent., 
or  any  idea  of  paying  higher  wages  than  are  paid  in  other 


324         ECONOMIC  AND   INDUSTRIAL    nKI.USIONS. 

branches  of  work  of  like  kind  in  and  around  Pittsburg 
(or  in  whatever  section  of  the  country  this  work  could  be 
done).  It  is  absurd  to  imagine  so  slender  a  basis  for  the 
fat  "  campaign  contributions  "  expected  of  them.  When 
they  build  their  works  at  Pittsburg  (or  anywhere  else)  in 
order  to  supply  tin  plate  at  a  very  much  higher  price  than 
it  can  now  be  bought  for,  they  will  soon  deprive  the  gov- 
ernment of  the  revenue  which  will  at  first  be  paid  in 
consequence  of  the  advance  in  duty,  and  even  of  the 
revenue  which  the  government  now  derives  from  the 
import  of  tin  plate  at  present  rates.  If  they  should 
succeed  they  would  make  the  tin  plate  with  as  little  labor 
and  as  small  a  number  of  laborers  as  are  now  engaged  in 
making  our  present  supply  in  Wales  (a  number,  so  far  as 
one  can  get  any  information  upon  the  subject,  not  exceed- 
ing 40,000  through  the  various  processes  from  ore  to 
finished  sheet).  These  would  be  mainly  ignorant  foreign 
workmen,  each  of  whom  in  this  country  might  be  compe- 
tent to  support  two  other  people.  The  demand  for  farm 
products  would  be  reduced  from  what  it  has  been  previ- 
ously computed  to  what  this  little  force  could  purchase. 
They  might  require  500,000  or  600,000  bushels  of  wheat 
and  3,000  or  4,000  bales  of  cotton,  and  other  articles  in 
corresponding  measure.  But  the  consumers  of  tin  plate 
would  pay  the  high  prices,  and  the  export  demand  for 
wheat  and  cotton  would  be  reduced  by  $21,000,000  worth, 
unless  our  British  customers  could  find  something  else  to 
exchange  with  us  for  wheat  and  cotton  (directly  or  indi- 
rectly) in  place  of  tin  plate.  Otherwise  they  would  have 
transferred  their  demand  for  wheat  and  cotton  to  India 
and  South  America,  where  their  own  goods  are  accepted 
in  exchange.  In  international  commerce  product  is  ex- 
changed for  product,  not  for  money.  We  are  building  up 
the  competition  of  other  countries  by  this  class  of  meas- 


SPECIAL   DISCUSSIONS.  ^1% 

ures,  in  both  wheat  and  cotton,  as  well  as  in  canned 
provisions  and  the  like,  thereby  depriving  our  farmers  of 
a  great  market  and  increasing  the  cost  of  everything  that 
they  use.  It  would  seem  that  the  farmer,  having  already 
been  so  starved  that  no  more  "  fat  "  can  be  fried  out  of 
him,  is  to  be  abandoned  altogether  and  made  common 
prey.     When  will  this  thing  stop  ? 

WHEN    WILL    THE    PEOPLE'S     EYES    BE    OPENED  ? 

Yes,  when  will  it  stop  ?  For  stop  it  will,  and  must.  It 
seems  to  be  one  of  the  laws  of  our  social  organization  that 
the  worst  abuses  are  destroyed  by  the  very  completeness 
of  their  triumph.  Only  the  assurance  which  the  tin-plate 
and  other  schemers  thought  they  might  draw  from  the 
last  presidential  and  congressional  elections,  that  the  eyes 
of  the  people  were  firmly  closed,  and  their  pockets  wide 
open  to  admit  any  hand  that  would  filch  from  them  in 
the  name  of  protection,  can  account  for  the  impudence  of 
their  present  demands  ;  and  that  very  impudence  is  doing 
more  than  the  best-studied  efforts  of  statesmen  and  econo- 
mists to  prove  what  protection  truly  is. 

Here  is  the  only  question  :  Is  it  this  tin-plate  iniquity 
that  is  to  open  the  people's  eyes,  or  must  we  await  some- 
thing yet  grosser  and  more  glaring — if  that  be  possible  ? 
From  every  point  of  view,  the  sooner  the  disguises  be 
stripped,  the  better. 

For  grotesque  extravagance  the  *'  case  for  the  tin-plate 
advance  "  rivals  the  ravings  of  delirium  and  beggars  the 
wildest  creations  of  opera-bouffe.  It  is  based  on  the  pre- 
tence that  our  country  is  paying  in  money  an  adverse 
balance  of  trade  because  of  purchases  of  foreign  plate,  and 
that  home  production  would  leave  us  this  money  for  wages 
to  workmen   not   now  employed  ;   when   the  simplest  in- 


326        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

spcction  of  any  foreign-commerce  statement  shows  that 
we  are  sending  out  no  such  money,  and  the  most  elemen- 
tary knowledge  assures  us  that  the  industry  could  only 
be  established  by  embarrassing  industries  more  important. 
It  assumes  to  defend  people  against  their  own  folly, 
asserting  "  immense  profit  on  importation  of  snide  brands," 
and  that  we  could  buy  cheaper  after  the  home  manufac- 
ture got  a  start ;  when  the  merest  tyro  in  business  knows 
that,  if  such  assertions  were  any  approach  to  the  truth, 
tin  plate  would  long  ago  have  been  made  here,  with 
the  "  protection  "  (already  absurdly  high)  now  allowed 
it.  Then,  as  if  for  a  cap-sheaf,  we  are  treated  to  the 
statement,  on  the  august  authority  of  a  certain  W.  C. 
Cronemeyer,  "  Secretary  of  the  American  Tinned-Plate 
Association,"  that  the  reason  why  higher  "  protection  " 
was  not  as  early  as  1864  extended  to  this  ware  w^as  an 
"  erroneous  decision  of  the  Secretary  of  the  Treasury." 
The  fabled  toad  that  tried  to  swell  to  the  size  of  a  neigh- 
boring ox  was  a  modest  and  rational  creature  beside  the 
Cronemeyer  who  presumes  to  set  his  legal  opinions  on  a 
level  with  those  of  William  Pitt  Fessenden. 

That  is  the  sort  of  stuff  these  precious  plotters  have  to 
offer  us.  With  it  they  have  scored  one  great  success,  in 
their  "  McKinley  Bill."     But  the  end  is  not  yet. 

POSTSCRIPT  ;    1 89 1. 

The  boast  of  the  tin-plate  statesmen,  headed  by  Sena- 
tor Aldrich,  that  "the  new  industry  would  give  employ- 
ment to  70,000  workmen  "  is  one  that  becomes  ludicrous 
when  subjected  to  the  rules  of  simple  arithmetic.  Thelabor- 
cost  of  our  yearly  supply  of  these  plates  is  easily  computed 
when  one  has  the  data ;  and  these  have  recently  been 
furnished  by  a  manufacturing  correspondent  of  the  New 
York   protectionist  trade-paper  Hardware.       Taking  his 


SPECIAL   DISCUSSIONS.  327 

figures  unchanged,  the  labor  on  800,000,000  pounds  of 
tin  plates  (this  exceeds  the  amount  the  country  has  annu- 
ally used  hitherto)  would  cost  some  $13,600,000,  making 
less  than  $200  per  annum  for  each  when  divided  among 
70,000  workmen.  If  the  labor-cost  of  mining  the  required 
iron  and  preparing  the  steel  be  also  included  we  should 
have  a  total  of  $17,360,000,  not  enough  to  employ  half  of 
70,000  men  at  the  ruling  prices  for  skilled  labor  in  this 
country. 

It  is  easily  calculated  from  the  same  figures  (origi- 
nally contributed,  it  appears,  with  no  other  object  than 
that  of  vindicating  the  practicability  of  the  industry  in 
the  United  States),  adding  to  this  cost  of  labor  that  of  all 
the  necessary  materials,  that  the  total  cost  of  plates  as 
here  produced  could  not  be  less  than  4.54  cents  per 
pound.  The  present  foreign  price  is  3.25  cents,  but  for 
five  years  past  the  average  has  been  less  than  3.  Hence 
it  follows  that  the  country  must  pay  at  least  $10,000,000 
a  year,  and  more  probably  over  $12,000,000,  in  addition  to 
what  it  now  pays  for  tin  plates,  for  the  privilege  of  sup- 
plying itself  from  this  yet  unborn  "  infant  industry."  If 
it  were  to  "  give  employment  to  70,000  workmen,"  and 
pay  them  good  wages,  the  plates  would  be  of  course  2 
cents  a  pound  dearer,  and  the  annual  increase  in  the 
total  cost  more  than  doubled.  But  the  "  infant,"  by  the 
latest  news,  is  contemplating  nothing  of  that  sort.  It  is 
endeavoring  to  circumvent  the  Contract  Labor  Law, 
exactly  as  predicted  above.  Moreover,  the  hints  with 
which  the  McKinley  organs  are  now  filled,  about  the 
wonderful  new  "  labor-saving  machinery"  by  which  the 
infant  is  to  be  rocked,  when  once  safely  born,  appear  to 
indicate  that  the  portion  of  this  extra  cost  to  which 
American  labor  can  fall  heir,  is  even  smaller  than  above 

calculated. 
25 


328        ECONOMIC  AND   INDUSTRIAL    nRI.USIONS. 

"  Drawbacks  to  the  Drawbacks." 

Printed  in  the  JVew  York  Tribune,  April,  1890,  as  a  reply  to 
a  communication  signed  "Protectionist,"  taking  the  writer  to 
task  for  his  omission  to  mention  that  section  of  the  Revised 
Statutes  which  allows  a  drawback  on  certain  kinds  of  machin- 
ery when  exported. 

As  a  constant  reader  of  your  interesting  journal  (a  sub- 
scriber to  the  daily,  I  might  add,  of  thirty  years'  standing) 
I  could  not  fail  to  notice  the  reference  to  myself,  my 
business,  and  my  Reform  Club  address  in  a  letter  from 
one  of  your  correspondents  in  your  issue  of  March  29th. 
"  Protectionist  "  is  giving  himself  some  trouble  on  my 
account  ;  but  his  criticism  of  my  position  loses  something 
of  its  force  by  the  very  evident  fact  that  he  has  no  practi- 
cal knowledge  of  what  he  is  talking  about.  In  other 
words,  has  not  familiarized  himself  with  the  exporting 
business. 

I  cheerfully  concede  to  him  that  if  the  relief  afforded 
by  R.  S.  Sec.  3020  had  been  as  complete  as  he  fancies 
that  it  was — as  complete,  I  further  concede,  as  was  pos- 
sibly the  intention  of  its  framers, — I  should  have  been 
gravely  at  fault  in  making  no  allusion  to  it ;  but  as  facts 
are  I  should  have  been  quite  as  much  at  fault  in  alluding 
to  it  without  calling  attention  to  the  embarrassments 
which  encounter  the  manufacturer  who  would  take  advan- 
tage of  the  "  drawback  "  privileges  allowed  him  by  law, 
and  which  combine  to  make  these  provisions  almost  a 
dead  letter.  The  least  of  these  is  the  fact  that  the 
"duty"  is  not  "refunded,"  but  only  a  portion  of  it,  90 
per  cent.  But  the  regulations  which  are  required  by  the 
Treasury  Department  to  guard  against  frauds  ;  the  neces- 
sity of  using  the  same  port  for  export  as  for  import,  of 
identifying  the  material  exported  with  that  imported,  and 


SPECIAL   DISCUSSIONS.  329 

of  proving  that  the  imported  goods  in  each  article  exceed 
half  its  value ;  the  limit  of  time  in  which  drawbacks  can 
be  claimed  ;  the  danger  of  having  orders  countermanded 
through  various  and  repeated  delays  ;  all  these  practically 
involve  so  much  annoyance  and  consumption  of  precious 
time  as  to  eat  up  all  the  profits  there  ever  w^ere  in  the 
drawbacks,  even  when  our  material  was  as  much  as  30 
per  cent,  cheaper  in  Great  Britain  than  here.  Again,  as 
it  ought  not  to  be  necessary  to  remind  your  correspon- 
dent, importations  in  small  lots  to  supply  part  of  our 
trade  could  not  be  so  economically  made  as  if  we  were 
permitted  to  make  them  wholesale  and  at  will.  There- 
fore, our  not  importing  raw  material  was  not,  as  he  in- 
ferred, "  because  the  domestic  material  was  cheaper  than 
the  foreign  without  the  addition  of  duty." 

I  have  spoken  in  the  past  tense  about  the  greater  cost 
of  my  raw  material,  because  the  most  important  part  of  it, 
iron  and  steel,  happen  just  at  present  not  to  be  seriously 
increased  in  cost  by  the  duty.  But  I  do  not  know,  nor 
does  any  one,  how  soon  it  may  be  increased,  as  it  was  in 
1880.  Were  I  tempted  to  believe  that  a  condition  belong- 
ing exclusively  to  the  last  few  months  depended  on  legis- 
lation a  quarter  of  a  century  old,  a  little  inspection  of 
price-lists  would  cure  me.  It  is  not  that  the  prices 
have  fallen  here,  but  that  they  have  risen  in  England. 
We  must  look  to  England  for  the  explanation,  then  ;  and 
there  we  easily  find  it  in  a  specially  sharpened  local  de- 
mand for  steel  and  iron,  and  in  the  approaching  exhaus- 
tion of  British  mines. 

Free  Raw  Material. 

This  letter  first  appeared  in  the  Nezv  York  World.  It  was 
written  in  reply  to  the  following  inquiry  : 


330        ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

The  Home  Market  Club, 
Boston,  Mass.,  May  i6,  1891. 
Mr.  A.  B.  Farquhar,  York,  Pa.: 

Dear  Sir. — Having  recently  seen  a  statement  attributed  to  you  that  your 
firm  sells  goods  in  the  Latin  countries  south  of  us  and  in  South  Africa  at 
prices  from  5  to  10  per  cent,  less  than  they  are  sold  for  in  this  country, 
and  that  "  the  manufacturer  who  is  able  to  export  his  goods  can  have  no  use 
for  Protection  except  to  enable  him  to  extort  more  money  from  home  pro- 
ducers than  he  is  able  to  get  from  those  abroad,"  I  desire  to  know  a  little 
more  about  the  facts  pertaining  to  this  business. 

Will  you  kindly  inform  me — 

1.  What  percentage  of  your  goods  is  sold  abroad  ? 

2.  Whether  or  not  you  sell  directly  to  houses  in  the  countries  named  or  to 
purchasers  in  this  country  for  shipment  thence  ? 

3.  WTiat  is  the  reason  that  you  do  not  get  as  good  prices  there  as  here  ? 

4.  Do  you  sell  any  goods  in  England,  France,  and  Germany,  and  if  so, 
how  do  prices  compare  with  American  prices  ? 

5.  What  is  the  value  of  the  raw  material  entering  into  a  plow  compared 
with  the  finished  product  ? 

6.  Do  you  think  the  duty  on  such  implements  as  you  manufacture  is  rela- 
tively higher  than  that  upon  goods  in  other  lines  of  wood  and  iron  and  of  the 
various  classes  of  textiles  ? 

7.  Would  you  favor  a  reduction  or  repeal  of  the  duty  on  manufactured 
goods  as  well  as  on  raw  material  ? 

8.  Do  you  believe  that  American  manufacturers  generally  would  be  able 
to  sell  many  more  goods  abroad  than  now  if  they  had  free  raw  materials, 
and  if  so,  about  what  percentage  more  than  now  ? 

Some  of  our  New  England  manufacturers  favor  free  raw  materials  and 
some  do  not.  I  am  desirous  of  obtaining  as  much  light  upon  the  subject  as 
possible  from  the  different  industries  in  different  parts  of  the  country.  You 
will  confer  a  favor  by  answering  the  above  questions  at  your  earliest  con- 
venience. 

Yours  truly, 

Albert  Clarke,  Secretary. 


York,  Pa.,  May  25,  1891. 

Mr.  Albert  Clarke,  Secretar>',  &c. 

Dear  Sir. — In  reply  to  your  favor  of  May  i6th  I  have 
to  acknowledge  it  quite  true  that  our  firm  sells  implements 
and  machinery  through  Mexico,  South  America,  and  Africa 


SPECIAL   DISCUSSIONS.  33  I 

"at  prices  from  5  to  10  per  cent,  less  than  they  are  sold 
for  in  this  country."  In  adding  that  "  the  manufacturer 
who  is  able  to  export  his  goods  can  have  no  use  for  Pro- 
tection except  to  enable  him  to  extort  more  money  from 
home  purchasers  than  he  is  able  to  get  from  those  abroad," 
I  was  only  stating  a  fact  that  I  believed  self-evident.  It 
is  inconceivable  that  the  same  rival  manufacturers  with 
whom  we  successfully  compete  on  equal  terms  in  foreign 
markets  can  be  thought  capable  of  driving  us  from  the 
market  at  our  own  doors.  On  that  point,  among  intelli- 
gent men,  no  argument  is  needed. 

Now,  as  to  your  questions.  I  will  answer  them 
seriatim  : 

First. — We  send  upon  an  average  about  one  half  of  our 
manufactures  abroad  ;  something  less  just  now,  owing  to 
the  troubles  in  the  Argentine  and  Chili,  where  we  usually 
find  our  best  market. 

Second. — In  both  ways.  We  sell  to  the  foreign  houses 
directly,  and  also  through  commission  merchants  in  New 
York. 

Third. — The  reason  we  do  not  get  as  good  prices 
abroad  as  at  home  is  that  we  have  to  compete  with  coun- 
tries having  the  great  advantage  of  free  raw  material  in 
their  manufactures  and  the  further  advantage  of  better 
transportation  facilities.  Great  Britain,  in  pursuance  of 
her  free-trade  policy,  has  for  years  been  extending  her 
foreign  commerce  ;  while  we,  pursuing  an  opposite  policy, 
have  left  her  in  full  possession.  The  Clyde  shipyards 
are  open  to  every  European  investor  who  wishes  to  start 
a  line  of  steamers,  while  we  must  satisfy  ourselves  with 
vessels  built  at  a  dozen  disadvantages. 

Fourth. — Yes,  we  sell  a  few  goods  in  England,  France, 
and  Germany,  but  they  are  made  especially  for  those 
markets,  and   it   would   be    rather  hard   to   compare   the 


332         ECONOMIC  AND  INDUSTRTAI.    DELUSIONS. 

prices   with  the   American.      They  undoubtedly  average 
lower,  for  goods  of  similar  construction. 

Fifth. — The  value  of  the  raw  material  in  a  plow  cer- 
tainly averages  more  than  half  its  total  cost.  We  manu- 
facture thousands  of  four-horse  plows,  for  instance,  for 
the  African  market,  weighing,  "  full-trimmed,  with  draft- 
rod,  wheel,  cutter,  two  extra  shares,"  boxed,  about  two 
hundred  pounds  each.  This  plow  is  delivered  on  board 
vessels  in  New  York  for  less  than  $5 — about  the  cost  of 
the  material  in  it  if  purchased  at  retail  prices. 

Handles  and  beam  .         ,         .         .         .         .         $1  00 

Steel  and  iron  .......  2  00 

Boxing,  freight,  etc.         ......  55 

Total  $3  55 

— leaving  about  %\  for  cost  of  labor  and  profit. 

Sixth. — The  duty  on  our  implements  and  machinery  is 
not  relatively  higher  than  upon  other  manufactures.  I 
need  not  enlarge  upon  this,  but  may  respectfully  refer 
you  to  the  tariff  schedule  of  1890. 

Seventh. — I  would  unhesitatingly  favor  a  repeal  of  the 
duty  on  all  the  manufactured  goods  we  make.  Since  we 
can  and  do  export,  the  duty  can  be  of  no  possible  service  ; 
and  since  it  tends  to  provoke  retaliation,  we  find  it  a 
serious  obstacle.  Reciprocity  treaties  covering  our  goods 
are  acceptable  to  us.  We  should  indeed  be  ungrateful  if 
they  were  not,  for  the  advantage  in  such  treaties  is  clear 
enough — for  the  manufacturer — whatever  might  be 
thought  of  them  for  the  farmer. 

Eighth. — I  do  believe  that  American  manufacturers 
generally  would  be  able  to  sell  many  more  goods  abroad 
than  now  if  they  had  free  raw  material.  The  importa- 
tion of  this  material  woukl  of  itself  stimulate  a  demand 


SPECIAL   DISCUSSIONS.  333 

for  American  products  abroad.  It  is  difficult  to  estimate 
the  percentage,  but  I  should  expect  an  increase  of  at  least 
25  per  cent. 

Although  my  time  is  very  much  taken  up,  and  I  am 
not  especially  desirous  of  publishing  the  inside  history  of 
our  business,  I  cannot  refuse  any  claim  upon  my  atten- 
tion made  with  a  view  of  "  obtaining  light." 

What  is  "  Raw  Material  "  ? 

The  following  reply  to  a  stricture  in  a  local  paper,  on  the 
fifth  answer  given  above,  first  appeared  in  the  York  Gazette 
June,  1891. 

An  extended  article  that  recently  appeared  in  the  York 
Dispatch,  criticising  a  statement  of  my  own — which,  in 
the  florid  and  fervid  rhetoric  of  the  protection  school,  it 
pleased  to  brand  as  a  "  misrepresentation  " — about  the 
cost  of  raw  material  in  a  plow,  seems  to  call  for  some 
acknowledgment.  To  my  mind  it  is  plain  that  the  Dis- 
patch's own  ideas,  at  the  points  where  its  denitnciations 
are  falling  thickest,  stand  in  need  of  considerable  clearing 
up.  Plainly  and  candidly,  I  set  down  its  dictum,  that 
"  the  cost  of  raw  material  is  deliberately  misrepresented  " 
in  my  letter  to  the  Home  Market  Club,  as  a  correction  of 
one  who  knows  at  least  what  he  is  talking  about,  by  one 
who  does  not ;  and  I  am  prepared  to  give  my  reasons  for 
taking  that  view. 

In  the  interest  of  brevity  I  avoided  detail  in  the  esti- 
mate they  copy,  but  by  raw  material  I  meant  what  every 
manufacturer  means,  the  shape  in  which  the  material 
entered  the  factory  to  be  worked  up. 

The  term  "  raw  material  "  was  not  used  by  mc — has 
never  been  used  by  anybody,  so  far  as  I  am  aware,  except 
by  protectionist    orators   and    essayists   in    their    loftiest 


334         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

flights  of  satire — to  mean  material  on  which  no  labor  has 
been  expended.  The  raw  material  of  any  manufacture, 
as  is  perfectly  understood  by  intelligent  people  "  outside 
of  politics,"  is  material  in  the  shape  it  has  when  it  reaches 
the  manufacturer's  hands.  It  is  perfectly  understood, 
also,  that  the  term  is  essentially  a  relative  one  ;  that  the 
raw  material  of  one  industry  may  be — in  fact,  generally  is 
— the  completed  product  of  another.  The  comparative 
cost  of  the  material  and  of  labor  for  which  my  own  firm 
had  to  pay,  was  the  plain,  practical  question  before  me  ; 
that  I  answered,  and  answered  it  so  that  the  Club  which 
sent  the  question  clearly  understood  me.  If  they  had 
wanted  me  to  go  beyond  our  own  factory,  and  track  our 
material  away  back  to  mine  and  forest,  they  could  easily 
have  said  so. 

In  the  supposed  correction  of  my  supposed  error  in 
setting  down  "  handles  and  beam,"  "steel  and  iron,"  as 
raw  material,  they  accept  "  wood  and  iron  ore  "  as  de- 
serving that  title.  But  where,  pray  ?  Wood  at  the  mill 
and  ore  ^t  the  furnace  have  had  value  added  to  them  by 
labor,  in  their  transportation,  just  as  truly  as  if  they  had 
been  manufactured  into  different  form  ;  they  are  the  com- 
pleted products  of  the  carrying  industry,  and  raw  material 
only  at  the  place  of  production.  There  we  find  the  lum- 
berman and  miner;  what  is  raw  material  to  the  carrier  is 
their  completed  product,  and  the  raw  material  of  the 
extractive  industries  must  be  a  growing  tree  or  ore  in  its 
lode — something  inseparable  from  the  soil  Avhere  it  is 
found.  Such  material  is  a  gift  from  God  to  man,  and  its 
value  is  simply  that  of  a  right  of  access,  and  forms  part  of 
the  rent  of  land.  It  disappears  as  movable  value  alto- 
gether. The  evolutionist  who  finds  pleasure  in  the  men- 
tal exercise  of  tracing  things  to  their  primordial  elements, 
or    gases,  and    so    discovering  a   material  that  is  ideally 


SPECIAL   DISCUSSIONS.  335 

"  raw,"  will  be  quite  justified  in  claiming  that  he  has  in 
that  exercise  quite  abolished  its  value.  It  is  but  a  small 
component  in  rent  of  ground,  to  start  with  ;  all  else  is 
added  by  labor  upon  it.  But  after  all,  this  ideal  raw  ma- 
terial is  not  raw  material  for  our  business,  because  we 
cannot  use  it.  It  has  to  be  elaborated  through  several 
degrees,  before  it  can  be  even  "  raw  material  "  to  the 
implement  manufacturer. 

The  Dispatch  writer  says  of  me  :  "  But  he  should  be 
willing  that  the  labor  of  other  men's  hands  should  also 
be  as  well  rewarded  as  his  own."  "  Have  not  the  iron 
men  as  good  a  right  to  be  protected  in  their  business  as 
Mr.  Farquhar  to  be  favored  in  his  ?  "  Will  it  surprise 
you  if  I  accept  that  sentiment,  and  that  view  of  my  duty, 
cordially  and  unreservedly  ?  I  have  not  asked,  and  shall 
not  ask,  any  privilege  which  I  am  unwilling  to  share. 
Whatever  advantage  there  could  be  for  me  in  free  raw 
materials,  all  other  manufacturers  are  more  than  welcome 
to.  Whatever  I  may  be  gaining  from  my  patents  (and 
of  that  he  appears  to  have  an  entirely  erroneous  notion, 
but  I  need  not  stop  to  debate  the  point)  others  able  to 
invent,  or  to  secure  the  confidence  of  inventors,  have  al- 
ways been  equally  free  to  gain — nor  would  I  dream  of 
seeking  to  abridge  their  freedom.  Since  our  patent  sys- 
tem frequently  encourages  monopoly,  unjust  to  the  peo- 
ple, I  am  even  in  favor  of  limiting  it  ;  and  I  would  be  alto- 
gether willing,  so  far  as  I  am  concerned,  to  exchange  all  the 
advantages  I  obtain  from  patents  for  the  greater  advantage 
of  free  raw  Diaterial.  But  there  is  an  important  differ- 
ence between  the  claim  of  iron-men  to  protection,  and 
our  own  to  free  raw  materials,  to  which  I  cannot  refrain 
from  calling  attention.  If  it  were  simply  a  question  be- 
tween them  and  ourselves,  the  protectionist  position 
would  be  so  unassailably  right  that  there  would  be  noth- 


336         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

ing  more  to  be  said.  But  why  do  they  forget  the  public, 
to  whom  both  they  and  we  are  undertaking  to  minister? 
By  protecting  iron  they  have  steadily  kept  its  price  at 
such  a  figure,  in  this  country,  that  we  have  been  com- 
pelled to  relinquish  into  English  hands  most  of  the 
world's  hardware  trade,  which  American  skill  and  indus- 
try could  easily,  but  for  that  handicap,  have  won  for  us ; 
they  have  hampered  exporting  enterprise  ;  they  have  ex- 
terminated the  ship-building  industry,  in  which,  while 
ships  were  built  of  a  material  which  could  be  procured 
cheaply  this  side  the  Atlantic,  we  led  the  world.  By 
allowing  us  free  raw  material,  on  the  other  hand,  they 
will  not  only  enable  us,  and  many  other  manufacturers 
similarly  circumstanced,  to  extend  our  business  and  find 
employment  for  hundreds  of  additional  hands  ;  but  will 
permit  us — nay,  compel  us — to  reduce  the  price  of  our 
tools  and  machines,  thus  handing  on  the  benefit  to  every 
one  who  has  to  use  them.  I  am  perfectly  aware  that  the 
iron-men  tell  us  that  their  object  in  obtaining  power  by 
law  to  increase  the  price  of  their  product  for  a  time,  is 
to  make  it  cheaper  for  the  consumer  in  the  end.  They 
promise  greater  cheapness,  just  as  Alexander  Hamilton 
promised  it  in  their  behalf  a  hundred  years  ago.  But 
estimating  the  result  as  those  who  meet  foreign  manufac- 
turers in  competition  have  to  estimate  it,  by  comparison 
of  our  prices  of  iron  with  theirs,  we  are  as  far  behind  as 
ever  in  the  race  for  cheap  production.  The  situation 
appears  to  be,  that  by  "  protecting  the  iron-men  in  their 
business,"  the  consumer  gets  a  renewed  proiiiisc  of  "  goods 
as  cheap  as  anybody's,"  on  which  payment  has  been  al- 
ready deferred  for  a  hundred  years  ;  while  by  granting 
free  raw  materials  he  gets  the  cheap  goods  themselves. 

A  vindication  of  my  plea  for  cheaper  materials  as  not 
merely  a  move  to  advance  my  own  personal  interests  at 


SPECIAL   DISCUSSIONS.  337 

the  iron-men's  expense,  but  as  one  to  promote  the  wel- 
fare at  the  same  time  of  the  great  body  of  our  citizens 
who  are  neither  implement-makers  nor  iron-men,  was  de- 
manded of  me,  and  that  I  have  made.  My  critics  will  be 
free  to  doubt  the  completeness  of  my  vindication,  and 
will  probably  use  their  freedom,  but  they  can  hardly 
doubt  that  I  have  stated  my  honest  opinion. 

Plundering  the  Farmers. 

Printed  in  the  New  York  World,  July,  1891.  The  World 
added  the  following  editorially  : 

"  The  fact  that  the  goods  of  *  protected  '  manufacturers  in 
the  United  States  are  sold  in  foreign  countries  for  less  than 
they  are  sold  for  here  is  utterly  fatal  to  the  contention  of  the 
monopoly  taxers.  That  this  is  true  was  very  practically  and 
very  conclusively  shown  by  the  answer  of  Mr.  A.  B.  Farquhar, 
the  agricultural-implement  maker  of  York,  Pa.,  to  the  Home 
Market  Club,  presented  by  the  World  and  widely  published 
by  tariff-reform  newspapers.  It  was  a  complete  demolition 
of  the  spurious  arguments  of  the  Protectionists,  and  has  put 
them  on  the  defensive  in  every  quarter.  There  is  no  answer 
to  it. 

"  As  a  last  resource  some  of  the  agricultural-implement 
makers  have  been  induced  to  appeal  to  Mr.  Farquhar  not  to 
imperil  the  profits  of  his  own  class  by  a  too  candid  statement 
of  the  truth,  and  many  efforts  have  been  made  to  induce  him 
to  recede  from  the  position  he  has  taken  in  favor  of  free  com- 
merce and  free  manufacturing.  He  has  been  urged  to  recon- 
sider and  see  if  he  cannot  modify  his  statement  of  the  facts,  and 
among  other  suggestions  to  startle  or  intimidate  him  is  the  one 
very  freely  made,  that  the  admission  on  his  part  that  he  takes 
a  higher  price  from  the  American  than  from  the  foreign  cus- 
tomer is  calculated  to  injure  his  trade  at  home.  The  latest 
sally  in  this  direction  was  by  the  Agricultural-Implement  Her- 
ald, published  at  Indianapolis.  We  give  to-day  Mr.  Farquhar's 
reply.  It  is  as  clear  and  as  crushing  as  the  answer  to  the 
Home  Market  Club. 


338         ECONOMIC  AN  J)   INDUSTA'IAL   DELUSIONS. 

"  If  the  '  protection  '  delusion  still  lingers  in  any  degree 
among  the  farmers  of  the  United  States  this  testimony  ought 
to  destroy  it.  They  pay  on  their  implements  five  to  ten  per 
cent,  more  than  the  same  implements  are  sold  for  to  farmers 
abroad  whose  products  are  marketed  in  competition  with  ours. 
The  duties,  are,  therefore,  simply  a  discrimination  against 
American  farmers  for  the  benefit  of  manufacturers  who  do  not 
need  it.  We  commend  the  facts  especially  to  the  farmers  of 
Ohio,  who  have  an  opportunity  to  deal  with  the  author  of  the 
iniquitous  McKinley  Bill." 

M.  R.  Hyman,  Esq.,  General  Manager,  &c. 

Dear  Sir  :  I  take  pleasure  in  acknowledging  your 
letter  of  June  23d,  referring  to  an  editorial  in  the  Indian- 
apolis News. 

The  News  is  correctly  informed.  We  do  sell  goods 
from  five  to  ten  per  cent,  cheaper  to  customers  in  foreign 
countries  directly  and  to  jobbers  for  export  than  we  do 
to  the  domestic  trade.  This  I  could  not  truthfully  deny 
or  candidly  conceal. 

You  "  would  like  to  learn  the  process  "  by  which  the 
manufacturer  "  can  afford  to  sell  the  foreign  buyer  goods 
for  less  than  he  can  the  home  customers."  The  reply  is 
simplicity  itself.  We  receive  the  prices  current  in  the 
markets  in  which  we  sell — we  cannot  get  more,  and  could 
not  be  expected  to  take  less. 

The  embargo  upon  competition  of  outside  producers 
and  upon  raw  material  advances  the  price  of  goods  in 
this  country  beyond  any  figure  possible  for  it  to  reach  in 
countries  where  the  law  visits  the  consumer  with  a  smaller 
measure  of  ingenious  malignity.  In  our  export  trade, 
moreover,  we  have  occasionally  some  advantage  in  the 
drawback  upon  imported  raw  material.  This  advantage 
is  of  less  importance  to  us  because  of  the  onerous  condi- 
tions by  which  recovery  of  the  drawback  is  attended ; 
but  it  has  its  legitimate  effect,  nevertheless,  in  giving  the 


SPECIAL   DISCUSSIONS.  339 

foreigner  our  goods  on  better  terms  than  our  own  country 
men  can  obtain.  We  sell  abroad,  in  free  markets,  at  the 
scantiest  margin  of  profit.  On  many  of  our  plows  for 
export  we  have  less  than  a  dollar  margin  for  our  hands 
and  ourselves  ;  our  raw  material — beams,  handles,  cast- 
ings, steel  plates,  wrought  bar,  in  the  rough — costing 
within  that  figure  of  what  we  realize  on  the  product. 
Raw  material,  I  need  not  explain,  is  here  used  in  its 
proper  meaning:  material  in  the  condition  in  which  it 
comes  to  the  factory.  The  raw  material  of  one  industry 
is  usually  the  finished  product  of  another. 

I  am  in  cordial  sympathy  with  the  American  farmer, 
and  welcome  every  indication  that  he  objects  to  paying 
an  excess  of  price.  I  would  cheerfully  exchange  the 
higher  domestic  prices  which  "protection  "  compels  the 
purchaser  to  pay  upon  our  goods  for  the  immense  ad- 
vantages which  free  raw  material  would  give  us  in  both 
home  and  foreign  markets.  Free  markets  all  around 
would  be  almost  as  great  a  relief  to  us  as  to  our  American 
customers. 

The  wool-growers  of  Indiana  and  Ohio  were  taught  to 
believe  that  the  McKinley  Bill  would  give  them  better 
prices.  But  what  is  the  result  ?  The  embargo  upon 
foreign  wools  has  closed  many  of  our  large  woollen  mills, 
throwing  the  workmen  out  of  employment.  The  fine 
American  wools  are  no  longer  in  demand  for  mixing,  and 
as  a  consequence  the  farmer  is  getting  from  four  to  five 
cents  a  pound  less  for  his  wool  than  before  the  McKinley 
Bill  was  enacted — besides  paying  more  for  his  clothing, 
carpets,  and  other  woollens.  Indeed,  the  history  of  our 
tariff  legislation  tends  to  prove  that  the  higher  the  tariff 
upon  wool  the  lower  the  price  to  the  American  wool- 
grower — because  of  the  necessity  of  mixing  different 
growths  in  one   fabric.      There  was   double   the   present 


340         ECONOMIC  AiVD  INDUSTRIAL   DELUSIONS. 

number  of  sheep  in  l^ennsylvania  in  the  days  of  compara- 
tively free  wool. 

This  is  the  conclusion  of  the  whole  matter:  That  if 
the  American  farmer  wishes  to  enjoy  the  twofold  advan- 
tage of  the  lowest  possible  price  in  his  supplies,  and  the 
best  prices  for  his  wheat,  corn,  and  cotton  exported  to 
pay  for  them,  the  tariff  embargo  must  be  removed. 

Second    Letter    to    the   "Home  Market  Club"  of 
Boston,  Mass. 

(Printed  in  the   York  Gazette  and  New  York  World,  July,    189I.) 

Gentlemen  :  You  devote  a  great  deal  of  space  in  your 
July  Bulletin  to  an  attempted  refutation  of  my  answer 
to  your  secretary's  questions.  The  New  York  Tribune,  at 
the  head  of  the  monopoly  tax  organs,  surprises  me  by 
the  discovery  that  you  have  "  shattered  my  case."  The 
principal  points  of  your  paper  I  shall  quote  as  briefly 
as  possible  in  your  own  words,  and  I  think,  after  dis- 
posing of  them,  my  position  must  be  acknowledged  as 
unassailable.  I  shall  be  quite  willing  to  leave  with  any 
intelligent  reader  to  determine  who  and  what  has  been 
shattered  by  the  collision. 

You  say  : 

"  Mr.  Farquhar's  answer  .  .  .  confesses  .  .  .  that 
the  agitation  for  free  raw  materials  is  an  agitation  for  free 
trade." 

Of  course  free  raw  materials  is  "  free  trade,"  in  exactly 
the  same  sense  that  free  sugar  and  reciprocity  are.  Any 
movement  for  partial  free  trade  might  be  called  "  free- 
trade  agitation,"  but  that  is  child's  play.  It  is  a  matter 
of  more  significance  that  you  take  the  liberty  of  treating 
my  personal  desire  that  the  import  taxation  on  our  manu- 


SPECIAL    DISCUSSIONS.  341 

factures  should  be  removed,  as  a  "  confession,"  "  commit- 
ting "  other  people  to  some  policy  they  have  disavowed 
— a  use  of  it  which  is  totally  without  justification.  I  have 
no  reason  to  believe  that  you  correcth  represent  the 
Massachusetts  politicians,  against  whom  you  quote  me .; 
but,  assuming  that  you  do,  to  pretend  that  any  position 
I  may  occupy,  ought  to  or  can  affect  theirs  in  any  way,  is 
either  altogether  disingenuous  or  hopelessly  silly. 
You  say : 

*'  The  steel  and  iron  of  such  a  plow  [four-horse,  full-trimmed] 
as  he  describes  does  not  cost  $2  without  any  labor  expended 
on  it.  .  .  .  Oak  for  the  woodwork  costs  $28  a  thousand. 
As  there  are  only  8|  square  feet  in  one  plow,  the  cost  is  less 
than  25  cents,  instead  of  ^i,  as  he  states  it." 

The  steel  and  iron  of  our  plows,  "  without  any  labor 
expended  on  it," — meaning  ore  untouched  in  the  hills, — 
cost  practically  nothing.  But  that  is  not  what  any  one 
was  thinking  of.  In  asking  me  about  "  raw  material," 
you  were  presumed  to  have  meant  what  every  business 
man  would  mean  in  speaking  to  another, — such  material 
as  entered  a  plow  factory  to  be  worked  up.  If  a  business 
man  had  had  occasion  to  learn  the  cost  of  that  material 
in  a  less  finished  state, — something  nearer  the  primal  ore, 
— he  would  have  inquired  of  the  manufacturer  who  re- 
ceived or  prepared  it  in  that  state,  not  of  me.  The 
"  gentleman  "  who  is  able  to  procure  the  steel  and  iron, 
bolts,  etc.,  for  a  four-horse  plow,  "  full-trimmed,  with  draft- 
rod,  wheel,  cutter,  two  extra  shares,"  for  less  than  $2, 
should  go  into  the  business  at  once.  Great  profits  await 
him.  The  same  may  be  said  of  him  who  can  get  out  all 
the  timber-work  for  such  a  plow  from  material  costing 
"less  than  25  cents."  Allowing  for  waste,  and  for  beams 
and  handles  rejected  as  defective,  he  who  calculates  the 


342         ECONOMIC  AND  INDUSTRIAL   DEirSIONS. 

cost  of  the  bare  timber  in  a  plow  by  multiplying  twice  8| 
into  $28  per  thousand,  could  not  long  make  both  ends 
meet,  in  the  practical  business.  I  was  not  concerned  with 
that  matter,  however.  The  raw  material  of  most  plow- 
works  at  the  present  day  consists  of  handles  and  beams 
in  shape,  and  with  that  alone  had  I  to  deal.  Until 
recently,  we  ourselves  sawed  the  beams  and  handles  used 
in  these  plows  from  lumber  purchased  for  the  purpose, — 
then  this  lumber  would  have  been  our  raw  material, — but 
we  found  after  counting  waste  that  the  beams  cost  us 
over  fifty  cents  apiece.  We  tried  it  many  times  before 
we  bought  them  in  shape.  As  they  come  to  plow  facto- 
ries generally,  the  beam  of  this  plow,  after  culling,  costs 
about  38  cents  ;  the  handles,  33  cents  a  pair,  were  left  out 
of  your  calculation  altogether ;  the  device,  rounds,  rods, 
shellac,  and  varnish  used  in  finishing,  29  cents,  more  or 
less;  total,  about  $1.  The  $2  covers  the  steel  coulter, 
wheel,  moulds,  lands,  extra  shares,  bolts,  and  other  metal 
not  a  part  of  beam  or  handles. 
You  say : 

"  Even  then  it  was  not  raw  material  in  any  true  sense.  It 
was,  on  the  contrary,  .  .  .  the  finished  product  of  other 
producers." 

Raw  material,  in  the  business  man's  acceptation,  is 
always  "  the  finished  product  of  other  producers."  Only 
to  the  miner  and  lumberman  can  it  be  otherwise.  But 
the  term  is  not  on  that  account  improper  to  use,  or  at  all 
ambiguous  in  its  meaning  to  such  as  have  a  fair  knowl- 
edge of  the  business. 

You  say  : 

"  He  does  not  require  a  change  in  the  tariff  to  get  his  ma- 
terial for  export  trade  practically  free  of  duty.  He  can  import 
it,  and  the  McKinley  tariff  allows  him  to  draw  back  99  per 
cent,  of  the  duty." 


SPECIAL   DISCUSSIONS.  343 

No  one  with  a  practical  knowledge  of  the  business  will 
contend  that  the  "  drawback  "  feature  of  our  tariff  laws 
gives  us  within  one  per  cent,  of  the  full  advantage  of 
free  raw  materials  for  export  trade.  If  the  McKinley 
law,  instead  of  taking  one  per  cent,  off,  had  added  a 
bounty  of  20  per  cent,  on,  it  would  not  yet  compensate 
us  for  the  delay  and  vexation  involved  in  proving  all  that 
the  manufacturer  has  to  prove  to  get  his  drawback,  or  for 
having  to  import  in  small  quantities  for  special  orders 
instead  of  wholesale. 

To  shift  the  discussion  of  the  actual  question  between 
us,  you  raise  another,  respecting  wages  paid  in  our  estab- 
lishment ;  and,  having  no  knowledge  of  the  subject,  you 
insinuate  something  about  "  the  low  level  of  $i  a  day," 
which  your  ally,  the  Tribune,  boldly  converts  into  the 
positive  assertion  that  "  the  average  wages  of  his  hands 
are  only  a  dollar  a  day."  It  is  nothing  to  the  purpose, 
but  I  may  state  in  passing  that  your  assertion  is  alto- 
gether untrue.  Counting  all,  except  apprentices  under 
instruction,  our  average  is  $1.42  and  a  fraction  ;  leaving 
out  also  the  "  laborers,"  very  nearly  $1.60.  Our  unskilled 
laborers  and  helpers  average  over  $1.  We  pay  the  best 
wages  prevailing  in  York  ;  and  while  these  wages  are  not 
the  highest  in  the  United  States,  when  compared  with 
the  cost  of  living  here  they  go  as  far  as  any  in  satisfying 
the  working-men's  wants. 

You  say  : 

"  If  transportation  is  all  he  seeks,  why  does  he  recommend 
.  .  .  a  scheme  which  would  close  the  great  shipyards  on 
the  Delaware,"  instead  of  some  subsidy  scheme  "  by  which 
this  government  would  aid  its  citizens  to  establish  and  maintain 
lines  precisely  as  the  British  and  French  and  German  govern- 
ments. ,  .  .  Instead  of  following  their  example,  he 
proposes  to  play  into  their  hands,  and  keep  the  exporters  of 
this  country  dependent  upon  them,  unless  they  can  build  up 


344         P.COMOMIC  AND   INDUSTRIAL   DEIfrsfONS. 

competing  lines  in  face  of  established  business  and  government 
subsidies.  .  .  .  Why  a  .  .  .  business  man,  without  a 
political  end  to  serve,  should  recommend  one  scheme  and  not 
so  much  as  mention  the  other,  is  a  mystery." 

Your  never-failing  .specific  for  every  evil,  actual  or 
alleged,  is  a  subsidy  out  of  the  public  treasury  into  some- 
body's pocket, — more  taxes  upon  the  many,  more  bounties 
to  the  few.  You  complain  because  I  suggested  a  real 
cure  for  our  deficiency  in  means  of  transportation,  and 
made  no  mention  of  a  scheme  for  calling  the  people's 
attention  away  from  it,  and  amusing  them  while  certain 
favorites  were  getting  something  for  nothing  out  of  the 
national  treasury.  The  country  made  a  fair  trial  of  ship- 
ping subsidies  twenty  years  ago,  and  found  them  a  dead 
failure.  Some  Continental  powers  have  tried  them  more 
recently,  and  with  little  or  no  success  in  their  immediate 
object  of  competing  with  England,  whose  fixed  policy  of 
commercial  freedom  maintains  her  unapproachable  supe- 
riority among  the  maritime  nations  of  the  earth.  England 
owes  not  a  particle  of  her  maritime  supremacy  to  the  pay- 
ment of  subsidies.  Of  her  merchant-vessels,  less  than  one 
sixth  receive  any  allowance  from  the  imperial  treasury, 
and  those  that  receive  it  are  the  lines  that  have  shown 
most  ability  to  prosper  without  it.  Why  should  I  have 
mentioned  your  wretched  subsidy  scheme  ?  Or  why 
should  you  insolently  censure  me  for  omitting  it  ?  I  was 
discussing  a  practical  question,  and  needed  to  speak  only 
of  practical  remedies.  I  felt  no  mission  to  aid  you  or 
your  kind  in  looting  the  treasury  and  further  oppressing 
the  tax-payers  of  the  United  States.  This  may  be 
truly  a  "  mystery  "  to  you,  but  it  will  be  none  to  any 
man  who  desires  to  benefit  the  whole  country  and  not  a 
class. 

You  say  : 


SPECIAL   DISCUSSIONS.  345 

"We  have  information  of  the  most  trustworthy  character 
that  Mr.  Farquhar's  firm  sold  abroad  an  average  of  only  about 
30  per  cent.,  instead  of  50  per  cent.,  of  its  goods  prior  to  the 
South  American  troubles.  .  .  .  He  has  founded  an 
argument  for  free  trade  upon  an  exaggerated  statement  of  an 
exportation  that  probably  is  not  and  cannot  well  be  duplicated 
in  any  other  line  of  manufacture." 

My  statement  was  perfectly  accurate.  You  could 
not  possibly  have  any  trustworthy  information  about 
our  business  except  what  we  might  communicate  to 
you.  If  you  chose  to  question  my  statement  and 
fish  from  a  corrupted  employe  something  different,  one 
would  have  supposed  that  in  view  of  the  tainted  source 
you  would  have  submitted  it  to  me  or  taken  some  other 
decent  and  sensible  means  of  verifying  it  before  giving  it 
to  the  public  as  truth.  For  the  year  1889,  preceding  the 
financial  collapse  of  the  Argentine  Republic,  our  sales  of 
goods  for  the  export  trade  even  surpassed  our  domestic 
sales,  and  the  tonnage  of  goods  manufactured  for  and 
shipped  to  the  foreign  market  largely  exceeded  domestic 
tonnage.  Such  an  export  business  is  probably  unusual,  I 
well  know.  The  aim  of  our  legislation,  to  infuse  through 
all  our  manufacturers  an  unworthy — -and  as  needless  as 
unworthy — terror  of  foreign  competition  on  equal  terms, 
has  met  with  a  success  beyond  its  desert,  and  many  other 
enterprises  that  might  even  now  make  themselves  known 
abroad  have  been  frightened  from  the  undertaking  by 
that  spirit  of  craven  dependence  on  government  bounty, 
which  has  been  so  artfully  and  so  unremittingly  inculcated. 
But  your  assertion  that  a  business  like  ours  "  cannot  well 
be  duplicated  in  any  other  line  "  is  surely  unfounded.  On 
examining  the  tables  of  our  exported  manufactures,  and 
passing  over  such  items  as  sole-leather,  boards,  etc.,  which 
are  hardly  more  than  crude  products,  I  find  "  sewing- 
machines  "  nearly  equal  to  all  agricultural  implements — 
26 


346        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

they  were  even  a  little  ahead  of  us  a  few  years  ago  ; 
"  house  furniture,"  ditto  ;  "  cotton  cloth,  colored,"  exports 
rather  in  excess  of  ours  ;  "  cotton  cloth,  uncolored,"  three 
or  four  times  our  amount.  The  export  trade  in  sewing- 
machines,  it  has  been  discovered,  is  kept  up  by  running 
prices  to  foreign  customers  25  per  cent.,  or  even  more, 
below  what  American  customers  must  pay ;  and  the 
other  manufactures  are  obviously  favored  by  cheap  raw 
material.  We  are  gaining  a  continually  increasing  market 
for  small  castings  used  in  buildings,  and  various  manu- 
factures of  wood,  for  which  articles  we  have  either  an 
advantage  in  raw  material,  or  a  large  amount  of  labor  in 
proportion  to  material.  There  is  ample  proof  in  those 
facts  that  our  trade,  if  perchance  it  is  exceptional,  need 
not  remain  so. 

You  quote  an  anonymous  and  doubtless  mythical 
"  Avorking-man  of  York  "  as  follows  : 

"  Is  it  honest  to  claim  that  the  wood  in  a  plow  costs  $l, 
when  it  costs  only  25  cents  ?  Is  it  honest  to  name  material 
and  transportation  as  the  only  advantages  his  foreign  com- 
petitors have  over  him,  when  he  knows  that  the  lower  cost  of 
their  labor  is  the  most  important  item  ?  Is  it  honest  to  exact 
from  his  own  countrymen  a  higher  price  than  he  gets  abroad, 

.  .  .  or  to  claim  in  1880  that  he  did  not  sell  goods 
cheaper  to  foreigners,  and  now  to  admit  it  ?  " 

Your  working-man  is  clearly  a  most  industrious  one. 
It  must  have  cost  him  a  good  deal  of  labor,  besides  con- 
siderable wear  and  tear  of  conscience,  to  get  together  such 
a  mass  of  baseless  falsehoods  as  he  has  served  up  for  your 
eager  appetite.  You  were  not  fortunate  in  your  sources 
of  information,  but  your  straits  were  such  that  you  found 
almost  any  detraction  acceptable ;  for  of  such  is  the  gos- 
pel which  the  Bullethi  delights  to  spread.  Accordingly 
you    have    adopted    this    fellow's    cackle    as    your    own ; 


.SPECIAL   DlSCOS.'ilONS.  347 

otherwise  I  should  not  notice  it.  Through  him  you 
assert  that  I  omitted  "  the  lower  cost  of  their  labor " 
from  my  account  of  the  advantages  of  foreign  competitors. 
I  did  not  omit  it,  because  it  has  no  existence,  and  there- 
fore could  not  be  omitted.  No  one  whose  skull  has  room 
for  the  most  rudimentary  notion  of  what  "  the  cost  of  la- 
bor "  really  is,  can  have  a  particle  of  difficulty  in  understand- 
ing that  if  our  plows  sell  in  South  Africa,  say,  side  by  side 
with  plows  of  English  make,  as  it  is  well  known  they  do  ; 
if  our  transportation  charge  is  higher,  as  it  must  be  when 
we  have  to  ship  by  way  of  England  ;  if  our  raw  materials, 
lumber  excepted,  are  more  costly,  as  any  inspection  of 
comparative  prices  will  instantly  show, — then  our  firm 
must  either  be  drawing  no  profit  whatever,  or  be  at  less 
expense  for  labor.  No  other  conclusion  is  possible,  unless 
some  way  can  be  found  for  making  larger  subtractions 
from  the  same  sum,  and  not  leaving  smaller  remainders. 
Which  is  the  fact  ?  Our  business  affords  enough  profit  to 
justify  continuance  in  it,  and  that  is  probably  all  that  our 
English  competitors  would  admit.  No  question  whatever, 
then,  that  the  cost  of  labor  on  our  plows  is  less  than  on 
the  English,  and  that  your  "  working-man  "  has  precisely 
reversed  the  truth. 

Our  average  of  daily  wages,  given  above,  is  certainly  in 
excess  of  English  figures.  Some  minds  are  capable  of 
seeing  in  that  fact  a  contradiction  of  what  I  have  just 
said.  Such  would  probably  conclude  that  if  an  English 
manufacturer  put  two  plows  in  a  box,  while  we  put  four, 
and  sold  each  box  at  three  fourths  of  what  we  get  for  one 
of  our  boxes,  he  was  furnishing  plows  cheaper.  Seven 
years  ago,  I  visited  some  English  agricultural  factories, 
and  saw  them  in  operation  ;  since  then  I  have  had  no 
trouble  in  understanding  or  in  explaining  how  it  is  that 
we  have  cheaper  labor  although  our  workmen  earn  more 


34-*^      ECOjVOArrc  and  industrtat.  delusions. 

per  day.  1  then  and  there  saw  that  their  "  workman's 
daily  labor "  was  not  the  same  thing ;  it  was  the  box 
holding  fewer  plows.  It  is  just  so  with  us  in  York. 
We  have  always  been  desirous  of  getting  hold  of 
more  "  high-priced  "  workmen,  for  the  very  purpose  of 
getting  cheaper  labor.  We  would  gladly  pay  an  even 
higher  average  of  wages,  if  our  country  (which  already 
leads  the  world  in  that  respect)  only  turned  out  more 
men  of  the  high-priced  sort.  For  years  we  have  made  it 
a  rule  to  employ  our  highest-paid  workmen  on  the  goods 
sold  at  smallest  profits, — in  other  words,  on  work  for 
export.  That  is  a  fact  which  an  inspection  of  our  pay- 
roll makes  easily  evident.  But  I  need  not  stop  longer  on 
a  point  so  well  understood  by  intelligent  men,  and  which 
the  writings  of  Mr.  Atkinson  famong  other  economists) 
have  made  so  clear. 

This  man's  complaint  that  we  sell  goods  at  the  market 
price  in  this  country  may  be  passed  over,  since  the  people 
have  the  privilege  of  reducing  this  market  price  by  re- 
moving our  "  protection."  I  have  already  assured  him  of 
my  approval  in  that  course.  He  charges  me  with  deny- 
ing, eleven  years  ago,  that  we  "  sold  goods  cheaper  to 
foreigners."  I  have  no  recollection  of  such  a  denial.  But 
if  I  did  make  it,  it  would  have  been  proper,  since  we  did 
not  sell  goods  to  foreigners  at  all  in  1880.  The  goods  we 
made  for  the  foreign  market  were  then  sold  exclusively 
to  dealers  in  New  York,  of  whose  manner  of  doing  busi- 
ness I  was  not  informed. 

You  conclude  : 

"  The  Democratic  press  .  .  .  demands  that  the 
economic  policy  of  the  country  shall  be  conformed  to  his 
wish.  .  .  .  Let  us  see  how  this  proposition  strikes 
other  manufacturers  in  his  own  city.  Here  is  what  they 
say : 


SPECIAL  JHscr'ssroNs.  349 

"  *  The  undersigned,  manufacturers  in  York,  Pa.,  believe 
that  without  a  protective  tariff  few  manufacturing  industries 
could  have  been  built  up  in  this  country,  in  the  face  of  the 
expressed  determination  of  established  foreign  concerns  to 
possess  the  market  and  prevent  domestic  competition.  We 
also  believe  that  we  could  not  now  continue  to  pay  wages 
much  in  advance  of  those  paid  by  foreign  competitors,  unless 
those  competitors  were  compelled  to  pay  the  difference  into 
the  United  States  Treasury  before  being  permitted  to  sell  their 
goods  here.  We  believe,  furthermore,  that  the  case  of  an 
American  manufacturer  selling  a  portion  of  his  goods,  which 
are  largely  of  special  design,  in  foreign  markets  at  prices 
confessedly  lower  than  those  at  home,  so  far  from  proving  that 
protection  is  no  longer  needed,  shows  how  an  assured  pros- 
perity at  home  enables  a  producer  to  develop  business  abroad. 
It  does  not  prove  that  he  could  sell  his  entire  product  at 
foreign  prices  and  continue  to  pay  American  wages.  We 
know  that  we  could  not,  although  York  is  much  more  favor- 
ably situated  for  economy  in  production  than  most  American 
cities  ;  and,  moreover,  we  believe  that  the  two  provisions  in 
the  new  tariff  for  a  rebate  of  99  per  cent,  on  imported  ma- 
terials for  manufacture  exported  and  for  a  reciprocity  with 
other  countries  in  the  dissimilar  products  peculiar  to  each, 
afford  us  a  much  greater  advantage  in  foreign  markets  than 
we  could  get  by  free  trade,  and  while  doing  this  they  both 
increase  business  and  lessen  the  cost  of  living  at  home.'  " 

(Here  follow  the  names  of  thirty-five  York  manufacturers, 
none  of  them  in  the  export  business,  and  but  one — and  that 
a  small  concern — engaged  in  the  manufacture  of  agricultural 
implements.) 

I  note  your  tender  fear  that  the  Democratic  newspapers 
will  decline  to  publish  thi.s  declaration  of  thirty-five  York 
manufacturers  that  they  want  all  they  can  get,  and  want 
it  as  long  as  they  can  keep  it.  It  will  be  no  fault  of  mine 
if  this  generous  wish  of  theirs  be  not  widely  known.  I 
reproduce  it  here  in  order  that  you  and  they  may  have 
the  full  benefit  of  it.  I  shall  even  ask  them  to  add  my 
free  and  unforced  testimony,  that  that  list  of  manufac- 
turing firms  includes  some  of  our  best  citizens,-  and  that 
the  entire  good    faith   of  any   declaration  to  which  they 


350        ECONOMIC  AND  INDUSTRIAL    DFJMSlONS. 

have  set  their  signatures  is  unimpeachable.  Hut  no 
amount  or  perfection  of  good  faith  can  supply  gaps  in 
their  knowledge  ;  and  if  these  manufacturers,  whom  I  am 
glad  to  count  among  my  personal  friends,  sincerely  believe 
that  "without  a  protective  tariff  few  manufacturing  in- 
dustries could  have  been  built  up  in  this  country,"  it  can 
only  be  because  their  information  is  incomplete  and  their 
credulity  has  been  imposed  on  ;  for  before  there  ever  was 
a  protective  tariff  here,  a  large  number  of  manufacturing 
industries  actually  were  built  up.  Alexander  Hamilton's 
celebrated  "  Report  on  Manufactures  "  is  authority  for 
that.  If  they  sincerely  believe  that  they  "could  not  now 
continue  to  pay  wages,"  etc.,  it  can  only  be  because  of  a 
confusion  in  their  minds  between  rate  of  wages  and  cost 
of  labor,  from  which  better-informed  minds  are  free.  If 
they  sincerely  believe  that  "  foreign  competitors  "  can  by 
any  conceivable  contrivance  be  ^'  compelled  to  pay  the 
difference  into  the  United  States  Treasury,"  it  can  only 
be  because  they  have  not  learned  how  foreign  prices  are 
regulated.  If  they  sincerely  believe,  in  opposition  to  my 
deliberately,  repeatedly,  emphatically  declared  opinion, 
that  I  should  be  in  the  least  puzzled  to  dispose  of  my 
"  entire  product  at  foreign  prices,  and  continue  to  pay 
American  wages  " — or  even  better  wages,  besides  employ- 
ing double  or  treble  my  force  of  hands, — if  allowed  free 
raw  material,  it  can  only  be  because  they  do  not  know 
quite  so  much  of  my  business,  from  an  outside  point  of 
view,  as  do  I  who  have  given  my  life  to  it.  If  they 
sincerely  believe  that  the  "  rebate  of  99  per  cent,  on 
imported  materials  for  manufactures  exported  "  is  better 
for  exporters  than  an  impartial  exemption  from  the  duties 
could  be,  it  can  only  be  because  they  are  without  practical 
experience  in  applying  the  rebate  provisions.  In  point  of 
fact,  I  doubt  if  the  entire  thirty-five  have  ever  exported 


SPECIAL  DISCUSSIONS.  351 

as  much  in  any  year  as  we  do  in  a  month.  If  the  Demo- 
cratic papers  fail  to  attach  as  much  importance  to  the 
testimony  of  my  friends  as  they  do  to  my  own,  it  will 
doubtless  be  because  they  know  that  an  opinion,  to  have 
real  value,  must  be  based  upon  some  degree  of  informa- 
tion as  well  as  sincere  belief. 

A  Specimen  Question. 

(Printed  in  the  New  York  Saturday  Globe,  July,  1890.) 

The  trouble  with  the  grand  "  campaign  of  education  " 
undertaken  on  behalf  of  Cleveland  and  Thurman  two 
years  ago,  is  now  well  known  to  have  been  that  it  did  not 
begin  far  enough  back.  Prepared  as  we  had  been  for 
some  degree  of  blindness  to  their  true  interests  on  the 
part  of  our  fellow-citizens,  for  some  degree  of  slowness  to 
learn  strange  truths,  and  eager  following  of  false  scents, 
we  had  yet  to  discover  that  none  of  these  obstacles  had 
been  duly  estimated  by  us — that  the  mists  were  denser, 
the  hides  tougher,  the  false  scents  more  alluring,  than  we 
had  dreamed. 

But  the  progress  of  time,  when  joined  with  earnest  and 
unceasing  efforts  on  our  part,  is  all  in  our  favor.  There 
are  encouraging  signs  of  an  interest  in  the  vital  question 
of  the  government's  power  to  tax,  newly  aroused  in 
many  who  have  hitherto  refused  to  listen  except  to  their 
party  oracles,  but  who  are  beginning  now  to  suspect  that 
it  may,  after  all,  be  worth  their  while  to  hear  what  is  said 
by  those  who  draw  inspiration  from  other  sources.  From 
a  vast  number  of  letters  of  inquiry,  brought  to  me  in 
almost  daily  installments,  I  select  the  following  by  a 
writer  who,  although  unusually  bright,  would  not  a  year 
ago  have  consented  "  to  look  at  this  great  question  "  on 
more  than  one  side  : 


35-         KCONOMIC  AND   INDUSTRIAL    DF.I.rsfONS. 

"...  While  I  cannot  agree  with  you,  1  am  determined 
to  look  at  this  great  cjuestion  from  every  standpoint.  I  think 
I  understand  your  views  as  to  the  effect  of  the  present  tariff 
system  on  the  various  business  interests  of  this  country,  but 
there  is  one  feature  of  the  (juestion  that  I  should  like  very 
much  to  have  you  touch  on,  and  it  is  the  method  of  raising 
400,000,000  (in  round  figures)  dollars  that  will  be  required  to 
run  this  government  for  the  fiscal  year  beginning  July,  1890  ?" 

Not  because  of  the  difficulty  in  answering  this  inquiry^ 
but  because  of  the  keen  practical  interest  it  has,  do  I 
think  my  reply  worthy  of  publication  and  attention.  It 
depends  on  one  or  two  principles  which  are  admitted,  I 
believe,  by  everybody. 

1.  There  is  an  amount  of  revenue,  on  any  given  line  of 
imports,  which  cannot  be  exceeded.  Increasing  the  duty 
increases  the  revenue,  until  that  amount  is  reached  ;  be- 
yond that  point  the  revenue  must  lose  more  by  dimin- 
ished importations  than  it  gains  by  the  higher  rate.  The 
amount  can  be  considered  as  a  fixed  one  only  when  con- 
ditions continue  the  same  ;  for  example,  removing  the 
duty  on  wool  will  greatly  reduce  our  importation  of  wool- 
len goods,  and  the  revenue  from  them,  though  the  duty 
on  the  latter  remains  unchanged  ;  so  it  may  then  be  true, 
though  not  true  now,  that  we  could  collect  more  revenue 
on  woollens  by  lowering  the  duty. 

2.  Many  of  the  import  duties  now  prevailing  are  in 
excess  of  the  point  at  which  the  largest  revenue  would  be 
derived  from  them.  This  is  a  result  which  it  is  the  object 
of  protection  to  attain  ;  for  it  is  only  by  the  greatly 
diminished  importations  which  follow  higher  rates  of 
duty,  that  that  policy  can  be  effective.  It  follows  that 
we  could  increase  our  revenues  by  a  slight  lowering  of 
the  duties  admitted  to  be  protective,  or  draw  an  undimin- 
ished revenue  from  a  quite  considerable  lowering.  It 
should  be  plain  to  cver\'  mind,  then,  that  we  might  secure 


SPECIAL   DISCI/SS/OjVS.  .353 

a  great  alleviation  of  this  species  of  burden,  without  any 
falling  off  of  revenue,  by  exercising  a  proper  judgment 
on  what  articles  and  to  what  amounts  to  make  our 
reductions. 

3.  The  foregoing  paragraphs  will  hardly  be  opposed. 
But  my  correspondent  will  censure  as  a  defect,  what  I 
commend  as  a  merit,  in  the  proposed  method  of  main- 
taining revenues  while  lowering  rates  of  duty  :  that  it 
accomplishes  this  by  increasing  our  importations  of  the 
articles  whose  protection  is  reduced.  My  reasons  for 
regarding  this  as  desirable  are,  (a)  that  by  securing  a  con- 
stant source  of  foreign,  in  addition  to  domestic,  supply, 
we  leave  the  price  of  the  article  less  at  the  mercy  of  those 
combinations  to  restrict  production  and  keep  up  prices, 
which  are  such  sport  to  the  producers  and  death  to  us 
consumers.  The  more  widely  distributed  our  supply,  the 
harder  it  is  to  "  corner."  (b)  Increased  imports  neces- 
sarily bring  about  increased  exports,  and  hence  encour- 
agement of  those  lines  of  industry  whose  products  are 
exported.  The  interdependence  of  exports  and  imports 
is  a  law  of  commerce  whose  truth  has  been  amply  and 
often  demonstrated. 

4.  Though  the  problem  of  my  correspondent  is  thus 
completely  solved  without  recourse  to  any  new  taxes,  or 
increase  of  old  ones,  I  do  not  recommend  that  we  so 
limit  ourselves.  There  are  a  few  luxuries  of  foreign  pro- 
duction, of  which  tea  and  coffee  are  most  important, 
which  are  particularly  and  pre-eminently  suited  to  bear 
the  weight  of  indirect  taxation  ;  because  they  are  luxu- 
ries, because  they  are  easily  accessible  to  the  collector, 
and  because  every  dollar  paid  by  the  people — allowing 
for  the  expenses  of  collection — is  available  for  the  govern- 
ment. It  can  only  have  been  this  high  and  exceptional 
fitness  for  taxation   that   induced   our  perverse  legislators 


.^54         ECONOMIC  AND   INDlH-iTRIA T.   DELUSIONS. 

to  grant  these  articles  the  exemption  that  should  have 
been  granted  to  so  many  other  articles,  a  few  years  ago ; 
the  public  being  cajoled  into  regarding  as  a  blessing  what 
its  experience  has  shown  to  be  a  grievous  oppression  :  ex- 
acting, beside  the  tax  to  the  government,  an  uncounted 
additional  tax  for  the  purpose  of  diverting  the  national 
industries  from  more  suitable  to  less  suitable  channels. 
Naturally,  to  those  who  can  be  made  to  believe  such  a 
diversion  of  our  industry  the  "  creation  "  of  an  industry, 
the  additional  tax  may  look  like  a  good  investment ;  but 
the  time  to  come  will  be  short,  by  my  reckoning,  before 
those  good  people  will  be  ranked  along  with  such  as  yet 
dream  that  human  contrivance  can  be  made  to  produce 
action  without  reaction — something  out  of  nothing. 

Popular  education  must,  as  already  said,  begin  far 
enough  back.  We  may  find  it  natural  to  suppose  that 
our  mode  of  lightening  the  people's  burdens  and  at  the 
same  time  supporting  the  government  was  made  suf- 
ficiently clear  in  the  "  Mills  Bill  " — a  measure  that  would 
be  extravagantly,  even  insanely,  protective  if  applied  to 
a  country  in  a  normal  condition,  but  which  was  accepted 
by  us  when  offered  as  the  greatest  progress  in  the  right 
direction  that  could  reasonably  be  undertaken  in  a  single 
step.  If  we  find  this  policy  not  so  clear  to  others  as  it  is 
to  us,  however,  we  should  spare  no  pains  to  make  it  so. 
In  studying  how  to  maintain  the  government,  we  have 
always  to  remember  that  "  no  tax  is  good  in  itself"  ;  all 
are  burdens,  and  the  study  of  the  statesman  is  to  choose 
such  as  bear  lightest  under  existing  circumstances.  What 
we  look  forward  to  as  the  best  system  of  taxes  for  the 
year  beginning  July,  1900,  may  therefore  be  very  far  from 
the  best  to  apply  for  the  year  beginning  July,  1890. 

In  this  reply  the  collection  of  our  revenues  by  a  tariff 
of  some  kind  is  assumed.     But  the  burden  upon  the  peo- 


SPECIAL   DISCUSSIONS.  355 

pie  would  be  lighter,  if  the  necessary  expenditures  of  the 
government  were  derived  from  direct  taxation.  There  is 
no  occasion  for  the  annual  expenditure  of  "$400,000,000," 
and  if  the  people  would  only  realize  the  fact  that  every 
dollar  expended  by  their  government  is  taken  from  their 
pockets,  by  far  the  largest  portion  coming  from  the  work- 
ing-men and  farmers,  there  would  be  an  end  to  the  waste 
of  hundreds  of  millions  in  jobbery  and  corruption.  Al- 
though at  peace  with  the  world,  and  comparatively  with- 
out a  standing  army  or  navy,  our  war  expenses  are  greater 
than  those  of  any  country  of  Europe,  notwithstanding 
their  enormous  standing  armies.  Half  of  this  is  worse 
than  wasted  ;  it  goes  to  fill  the  pockets  of  pension  sharks 
and  to  encourage  idleness  and  dissipation.  Thirty  years 
ago  the  expenses  of  our  government  were  but  $50,000,000 
per  annum,  and  $200,000,000  would  be  amply  sufficient 
now. 


CHAPTER   XI. 

THE   SILVER    QUESTION. 

The  following  essay  was  originally  prepared  for  the 
York  Gazette  and  appeared  in  its  columns  in  a  series  of 
nine  papers,  from  January  to  March,  1891.  A  tenth  paper 
was  added  in  May.  Its  object  was  to  contribute,  by  a 
timely  appeal  to  the  sober  sense  of  my  fellow-countrymen 
— particularly  those  in  fellowship  with  the  Democratic 
party — some  help  in  averting  a  great  and  threatening 
disaster.  After  the  appearance  of  the  first  paper,  that 
disaster  grew  less  threatening  ;  for  the  Fifty-first  Congress, 
from  whose  pliancy  in  sacrificing  public  interests  to  power- 
ful private  interests  the  silver  men  had  already  extorted 
one  all-too-liberal  concession,  finally  declined  to  go  further 
upon  the  path  down  which  they  would  have  dragged  it ; 
and,  moreover,  each  of  the  two  great  parties  had  heard 
and  heeded  words  of  sound  counsel  from  an  approved 
and  trusted  leader.  The  Republican  Secretary  of  the 
Treasury,  who  obediently  served  the  silver  interests  while 
in  the  Senate,  had  now  become  awakened  to  the  danger 
of  further  submission,  and  had  shown  that  danger  in  an 
address  to  business  men,  whose  clear,  well-considered 
words  speedily  derived  a  terrible  emphasis  from  his  sud- 
den death.  The  great  Democratic  leader  had  also  been 
heard,  in  a  letter  read  at  a  New  York  meeting.  Those 
three  short  paragraphs  over  the  signature  of  Grover 
Cleveland  will  have,  and  deserve  to  have,  great  weight 
with  the  Democratic  party. 

356 


THE   SILVER   QUESTION.  357 

Nevertheless,  a  grave  peril  yet  fences  the  American 
people.  The  public  men  of  both  political  parties  through- 
out the  South  and  Southwest,  and  in  the  silver-producing 
States,  together  with  many  leaders  in  other  sections, 
urged  on  by  a  vast  and  powerful  organization  known  as 
the  Farmers'  Alliance,  seem  unflexibly  determined  that 
the  United  States  shall  have  "  free  coinage  of  silver." 

Their  proposition  is  as  follows :  "  Hereafter  any  owner 
of  silver  bullion  may  deposit  the  same  at  any  mint  of  the 
United  States,  to  be  formed  into  standard  dollars,  for  his 
benefit,  and  without  charge.  The  owners  of  said  bullion 
shall  have  the  option  to  receive  coin,  or  its  equivalent  in 
Treasury  certificates,  and  such  bullion  shall  be  sub- 
sequently coined."  Thus  runs  the  proposed  law  as  it 
passed  the  Senate. 

What  does  this  measure  signify,  and  what  will  be  its 
probable  effects?  It  means  that,  so  far  as  these  states- 
men can  compass  it,  the  government  is  to  take  one  dollar 
of  the  money  drawn  by  taxation  from  the  American 
people,  and  pay  it  for  every  eighty  cents'  worth  of  a 
certain  commodity  that  may  be  offered  for  sale.  The 
eighty  cents  will  be  called  a  dollar  after  receiving  a  par- 
ticular shape  and  impression  ;  but  as  that  operation  costs 
but  a  small  fraction  of  twenty  cents,  and  adds  nothing  to 
its  value,  it  must  remain  intrinsically  only  eighty  cents. 

If  the  government  stamp  were  worth  twenty  cents,  why 
might  it  not  be  worth  ninety-nine  cents  ?  Why  take  an 
expensive  metal  with  which  to  create  a /////i' wealth,  when, 
by  using  paper,  five  times  as  much  wealth  might  be 
created  in  the  same  operation  ?  In  sober  truth,  a  nation 
has  no  such  power,  when  it  coins  money  to  supply  its 
citizens  with  a  standard  or  measure  of  wealth,  and  wealth 
can  no  more  be  created  by  fiat  out  of  silver  than  out  of 
rags.     Paper  money  is  simply  credit,  worth  its  face  value 


358         KCONOMIC  AND  INDUSTRIAL  DELUSIONS. 

only  when  the  people  have  an  abiding  faith  that  every 
bill  can  be  redeemed  in  coin.  Its  value  is  founded  on 
coin.  The  value  of  coin  depends,  always  and  necessarily, 
on  the  cost  of  producing  it.  Though  government  should 
call  25.8  grains  of  standard  gold  and  412^  grains  of  stand- 
ard silver  by  the  same  name  of  one  dollar,  its  decrees  are 
impotent  to  make  equal  the  cost  of  producing  the  two. 
None  knows  this  last  fact  better  than  the  silver-producers 
themselves,  and  that  is  the  very  reason  why  every  man  of 
them  in  this  broad  land,  no  matter  what  his  party  affilia- 
tions, is  clamoring  for  free  coinage  of  silver. 

Why  that  wealthy  and  powerful  class,  and  those  depend- 
ent upon  it,  all  banded  together  by  self-interest,  should 
urge  this  measure,  is  as  clear  as  day ;  but  why  the  great 
Democratic  party,  which  has  just  won  a  glorious  victory 
in  defence  of  the  masses  against  the  classes — why  the 
same  leaders  who  are  so  nobly  battling  for  the  people 
against  other  special  interests  and  mighty  monopolies, 
should  endeavor  to  create  this  more  dangerous  monopoly, 
is  a  harder  question  to  answer. 

The  parallel  is  perfect.  There  is  no  argument  in  favor 
of  free  coinage  that  has  not  also  been  used  in  defence  of 
protection.  In  both  there  is  an  organization  of  million- 
aires, assisted  by  an  unscrupulous  lobby,  pleading  with 
pathetic  tenderness  in  behalf  of  the  farmer  and  working- 
man.  In  one  it  is  "  the  poor  man's  dollar,"  while  in  the 
other  it  is  "  the  dignity  of  American  industry."  In  one 
the  bugbear  is  "gold  bugs,"  and  "Wall  Street  sharks," 
while  in  the  other  it  is  "British  gold,"  and  "pauper 
labor."  In  both  cases  the  government  is  asked  to  tax 
the  many  for  the  benefit  of  the  few,  in  the  hope  that  the 
few  will  then  proceed  to  share  part  of  their  gains  with  the 
many. 

Will  some  "  Alliance,"  "  Knight,"  or  Bonanza  advocate 


THE    SILVER   QUESTION.  359 

of  free  coinage  tell  us  how  the  farmer  will  obtain  a  larger 
share  of  the  national  wealth  by  having  himself  taxed  to 
pay  for  transferring  metal  from  mines  in  Nevada  to  vaults 
in  Washington,  and  how  the  working  man  will  be  benefited 
by  receiving  for  his  daily  or  monthly  wages  money  of  less 
purchasing  power  in  every  market  where  necessary  supplies 
are  to  be  bought  ;  or  are  we  expected  forever  to  accept 
declamation  for  demonstration,  rhetoric  for  reasoning  ? 

No  prouder  honor  could  be  mine  than  to  have  borne 
some  appreciable  part  in  fixing  the  attention  of  Demo- 
cratic citizens  on  that  first  essential  of  good  government, 
an  untarnished  public  credit  ;  on  the  fleeting,  fickle, 
delusive  character  of  the  best  relief  that  unlimited  silver 
coinage  can  possibly  bring  to  present  agricultural  distress; 
and  finally  on  the  true  remedy,  which  is  lost  to  sight  in 
the  chase  after  a  quack  nostrum.  If  that  distress  cannot 
be  relieved  by  pruning  down  our  excessive  import  taxa- 
tion, it  is  surely  not  among  the  ills  "  which  kings  or  laws 
can  cure." 

Now,  if  ever,  is  the  time  for  every  one  who  has  at 
heart  the  cause  of  sound  political  economy  and  fair 
dealing  to  make  his  voice  heard. 

IS    BI-METALLISM    POSSIBLE  .? 

>  There  are  some  words  very  easy  to  define  in  language, 
which  are  yet  terribly  difficult  to  translate  into  practical 
working.  It  is  no  trouble  at  all  to  tell  any  one  who  in- 
quires of  us,  ''  bi-metallism  means  the  use  of  two  metallic 
standards  on  exactly  equal  terms,  at  some  definitely  fixed 
ratio  of  value,  so  that  any  debt  may  be  paid  or  other  con- 
tract performed  equally  well  with  one  of  them  or  with  the 
designated  ratio  of  the  other,"  just  as  it  is  to  define  the 
dragon  or  gryphon  as  "  a  serpent  with  the  wings  and  beak 
of  a  bird  ";  the  pinch  comes  only  when  we  are  required  to 


-^6o         F.CONOMIC  AND   INDUSTRIAL   DELUSION. 

confirm  our  definition  by  a  practical  example.  Not  that 
the  difficulty  of  illustrating  the  two  definitions  has  the 
same  utterly  hopeless  character  ;  for  while  we  may  be 
perfectly  certain  that  no  imaginable  labor  or  study  could 
discover  or  produce  for  us  such  a  dragon  or  gryphon  as 
our  definition  calls  for,  there  is  no  such  impossibility  in 
the  case  of  double  coinage.  Human  effort  and  human 
contrivance  are  capable  of  achieving  the  task,  it  may  be 
admitted.  But  for  every-day  practical  purposes  a  com- 
plete example  of  bi-metallism  is  as  inaccessible  as  one  of 
the  monsters  of  mytholog>^ 

Why  have  we  no  example  of  silver  and  gold  entering 
on  equal  terms  into  a  national  currency  ?  There  are  ex- 
amples in  abundance  of  countries  having  a  silver  standard 
— China,  India,  Mexico,  and  other  regions  of  Spanish 
America.  But  these  do  not  give  us  bi-metallism,  for  in 
them  gold  is  not  regularly  current  at  a  fixed  ratio  of 
value.  It  is  easy  to  find  examples  of  countries  where 
silver  circulates  as  a  limited  legal-tender — Great  Britain 
and  its  colonies,  and  Germany.  In  these  the  ratio  is 
definite  enough,  but  the  two  metals  enter  unequally ; 
gold  with  the  imperial  stamp  will  pay  any  debt  whatever, 
while  silver  coins  from  the  same  mint  are  not  accepted  in 
any  payments  above  some  such  small  sums  as  five  or  ten 
dollars.  There  are  other  countries  which  set  no  limit,  but 
put  the  two  metals  on  an  inequality  by  refusing  to  extend, 
on  any  terms,  the  coinage  of  silver  beyond  the  amount 
already  in  circulation — France,  Italy,  and  other  countries 
of  the  "  Latin  Union,"  in  which  the  franc  is  the  unit. 
These  countries  continued  to  furnish  beautiful  illustrations 
of  the  possibility  of  a  double  standard  up  to  the  time  when 
they  unfortunately  shut  off  their  coinage  of  silver ;  in  much 
the  same  way  that  the  old  Grecian  taught  his  horse  to  live 
without   eating — it    was  a   magnificent  success,   until  the 


THE    SILVER    QUESTIOX.  36 1 

poor  brute  spoiled  the  whole  experiment  by  unfortunately 
dying.  Our  own  land,  under  its  latter-day  tendency  to 
plunge  its  currency  into  reckless  confusion,  mixes  up  the 
second  and  third  plans  :  its  minor  silver  coins  are  legal 
tender  for  small  debts,  while  its  "dollar  of  the  daddies," 
dollar  of  Bland  and  Allison,  is  coined  only  in  strictly 
limited  amounts.  Search  where  we  will,  on  this  or  any 
other  continent,  the  bi-metallism  of  our  definition  is  not 
to  be  seen  in  practical  working.  The  idea  has  yet  to  be 
materialized. 

Nevertheless,  the  idea  is  no  impossible  one,  if  the  means 
are  only  granted.  There  is  a  way  of  accomplishing  it,  just 
as  there  is  of  keeping  any  kind  of  merchandise  at  a  certain 
price.  We  may  study  the  methods  of  Chicago's  "  Old 
Hutch  "  in  cornering  and  bulling  wheat ;  of  Claus  Spreckels 
in  his  sugar  operations  ;  of  the  "  Binding  Twine  Combine," 
the  "  Wood-screw  Trust,"  and  so  on,  in  commanding  higher 
prices  for  their  wares  ;  and  draw  our  inference  from  them. 
The  all-essential  requisite  for  fixing  a  price  on  any  article 
in  any  market,  is  to  get  control  of  the  entire  supply.  If 
the  kind  assistance  of  import  duties  is  not  available  for 
our  purpose,  we  must  provide  ourselves  with  the  means  to 
buy  up  all  of  the  article  that  may  be  offered,  anywhere  on 
the  globe,  until  the  price  rises  to  our  figure ;  or  keep  a 
stock  in  hand  sufficient  for  unlimited  sales,  when  the 
price  is  too  high  for  us  and  we  seek  to  reduce  it.  Some 
of  our  statesmen  assume  this  great  country  to  be  vitally 
interested  in  giving  to  258  grains  of  gold  the  exact  pur- 
chasing power  of  4,125  grains  of  silver.  Why  it  should 
be  so  interested,  no  one  knows — these  statesmen  certainly 
cannot  explain.  But  be  it  so,  and  let  us  suppose  ourselves 
setting  about  the  establishment  of  that  price.  Since  our 
258  gold  grains  will  now  exchange  for  more  than  5,000  of 
silver,  it  is  silver  that  we  must  at  once  begin  buying,  and 


362         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

must  continue  to  buy,  resolutely  and  steadily,  until  the 
ratio  of  258  to  4,125  is  reached.  The  "amount  of  surplus 
silver  on  the  world's  market "  is  an  amount  very  differently 
estimated  by  different  people  ;  but  this  we  know  certainly 
about  it — it  will  be  very  much  larger  when  the  value  of 
silver  approaches  one  sixteenth  of  gold  than  it  is  at  one 
twentieth.  After  all  this  surplus  is  purchased  and  stored, 
what  will  next  happen  ?  Probably  this :  having  at  such 
pains  increased  the  value  of  silver  with  respect  to  all  other 
valuables,  we  shall  find  ourselves  activ^ely  stimulating  the 
production  of  that  metal — new  mines  will  be  developed, 
old  disused  mines  will  be  reopened,  and  the  tendency  of 
the  increased  product  to  lower  the  price  will  have  to  be 
counteracted  by  new  purchases.  In  the  meanwhile,  no 
silver  can  be  sold  by  our  Treasury,  or  the  required  ratio 
of  value  can  no  longer  be  maintained.  The  cost  of  the 
whole  hoard  must  therefore  be  borne  by  the  taxpayers  of 
the  United  States,  to  not  one  in  five  hundred  of  whom 
the  investment  brings  any  return  ;  it  might,  so  far  as  the 
great  body  of  us  are  concerned,  be  sunk  in  the  sea.  Cer- 
tain experts  are  of  the  opinion  that  no  future  discoveries 
of  silver,  on  the  scale  of  those  we  have  seen  within  twenty 
years,  are  to  be  expected.  Should  they  happen  to  be 
right,  the  burden  would  probably  rest  somewhat  lighter 
in  course  of  time — on  the  next  generation  perhaps,  but 
hardly  on  our  own. 

A  practical  example  of  bi-metallism  is  thus  shown  to  be 
possible.  But  the  probability  that  our  citizens  will  be 
persuaded  to  tax  themselves  with  the  millions — maybe 
hundred  millions — needed  to  exhibit  it,  may  be  set  down 
as  too  small  for  rational  consideration.  The  object  really 
sought  by  the  advocates  of  "  free  coinage,"  therefore,  can- 
not possibly  be  bi-metallism.  They  are  evidently  seeking 
some  other  object — and  what  is  that  other  object  ? 


THE   SILVER   QUESTION.  363 

BI-METALLIC    COINAGE    BY    INTERNATIONAL    AGREEMENT. 

In  calling  attention  to  the  advocates  of  free  silver  coin- 
age who  profess  a  desire  to  "  put  the  two  metals  on  an 
equality,"  I  have  suggested  that  in  leaving  out  of  view 
the  most  necessary  as  well  as  most  burdensome  measure 
for  making  that  policy  a  success — the  accumulation  by 
taxation  of  a  fund  sufficient  to  buy  all  of  the  overvalued 
metal  that  the  whole  world  is  prepared  to  supply  at  less 
than  our  legal  coinage  rate — they  prove  themselves  to  be 
false  guides  ;  either  ignorant  how  to  attain  their  professed 
object,  or  really  aiming  at  one  entirely  different.  It  is 
well,  however,  before  undertaking  the  task  of  disen- 
tangling real  objects  from  professed  ones,  to  examine 
some  proposed  easier  means  for  securing  the  desired 
equality  between  silver  and  gold,  than  recourse  to  an 
elaborate  "  silver  corner." 

It  is  widely  believed  that  the  charge  of  maintaining  a 
ratio  of  value  equal  to  the  legal  coinage-ratio  would  not 
necessarily  be  borne  by  one  country  alone  ;  that  if  one  or 
more  of  the  strong  European  powers  were  to  join  us  in 
decreeing  a  fixed  price  for  silver,  that  price  would  by 
their  and  our  united  action  become  the  standard  price  by 
which  other  nations,  and  in  time  all  their  citizens,  would 
be  governed  ;  and  that  free  bi-metallic  coinage  could  cer- 
tainly prevail,  at  least  as  long  as  the  agreement  held.  The 
bi-metallists  of  Europe,  headed  by  M.  Cernuschi,  earnestly 
advocate  this  consummation  as  both  desirable  and  practi- 
cable, and  with  them  agree  some  of  the  best  economists 
in  our  country — F.  A.  Walker,  Hugh  McCulloch,  S.  D. 
Horton,  and  many  others.  In  their  view,  silver  is  in 
itself  quite  as  good  a  measure  of  value  as  gold,  if  not  even 
better — for  its  fall  in  price,  within  the  last  twenty  years, 
has  exactly  coincided  with  the  cheapening  of  many  neces- 
saries of  consumption,  through  economies  in  production 


364         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

and  in  transportation  ;  and  it  has  therefore  held,  within 
that  period,  nearer  to  what  they  consider  the  true  unit  of 
value :  the  value,  that  is  to  say,  of  a  constant  quantity  of 
those  common  necessaries.  They  also  show  us  that  the 
rude  unsettlement  of  prices  caused  by  rich  discoveries  of 
gold,  which  was  felt  about  1850  and  may  again  occur  when 
exploration  brings  new  deposits  to  light,  might  be  greatly 
relieved  if  we  were  allowed  another  financial  support  to 
rest  on.  The  proof  that  their  proposed  consummation  is 
desirable  is  itself,  they  argue,  proof  that  it  is  practicable ; 
for  what  nations  agree  that  they  ought  to  have,  that  they 
will  set  about  obtaining. 

The  weakness  of  the  international  bi-metallist  position 
lies  in  this  last  argument — essentially  in  its  practical  side. 
Even  w^ere  it  true — and  it  is  far  from  true — that  the  best 
opinion  of  Europe  is  as  entirely  committed  in  favor  of  the 
double  standard  as  it  is  in  favor  of  a  great  reduction  in 
standing  armies,  it  might  as  readily  fail  in  achieving  the 
former  end  as  it  has  the  latter.  Nor  would  the  induce- 
ments that  we  could  hold  out  to  the  European  nations  be 
strong  enough  to  move  them  ;  none  would  be  easily  able 
to  see  in  our  project  any  so  obvious  tangible  gain  for  its 
own  citizens,  as  the  power  to  sell  the  product  of  their 
mines  at  a  higher  price  would  undoubtedly  bring  to  some 
of  ours.  Europe  would  be  more  ready  than  our  United 
States  have  been,  moreover,  to  count  the  cost  of  the  enter- 
prise before  embarking  in  it.  For  to  assure  the  equal 
currency  of  the  two  metals  it  would  be  no  less  necessar}' 
to  make  preparations  on  a  large  scale  for  "  cornering  "  one 
of  them,  with  several  nations  in  the  "  bull  pool,"  than  if 
all  the  work  were  thrown  upon  one  ;  the  share  of  the  bur- 
den resting  on  each  would  only  be  somewhat  lighter.  It 
seems  a  perfectly  reasonable  expectation,  therefore,  that 
the  uncertain  gains  and  the  certain  costs  of  the  proposed 


THE   SILVER   QUESTION.  365 

bi-metallic  agreement  will  deter  European  nations  from 
entering  it  with  us  in  the  future  as  in  the  past. 

However  grave  the  difificulties  that  lay  in  the  way  of 
this  project  before  our  government  committed  itself  by 
legislation,  there  can  be  no  question  that  we  have  further 
aggravated  them  by  declaring  for  the  ratio  of  258  to  4,125, 
or  one  to  fifteen  and  eighty-five  eighty-sixths,  in  1878. 
That  definite  declaration  was,  it  will  be  remembered, 
accompanied  by  an  invitation  to  the  leading  powers  of 
Europe  to  join  us  in  coining  silver  freely  at  a  fixed  ratio ; 
but  there  can  be  little  wonder  that  our  invitation  fell  flat. 
The  question,  "If  those  people  across  the  Atlantic  are 
going  to  keep  on  paying  one  in  gold  for  fifteen  and  eighty- 
five  eighty-sixths  in  silver,  when  the  market  rate  here  is 
down  to  one  for  eighteen  or  more,  why  need  we  do  any- 
thing further  in  the  matter  than  simply  furnish  them  all 
the  silver  they  want  to  buy  at  their  price  ?  "  was  not  one 
that  needed  to  be  twice  asked.  The  European  powers 
heard  us  politely,  encouraged  us  to  continue  as  we  had  set 
out,  and  declined  to  co-operate.  We  have  not  yet,  to  be 
sure,  allowed  them  the  opportunity  to  trade  off  their  old 
silver  here  at  a  higher  price  than  they  could  get  for  it  at 
home  ;  but  we  have  never  failed  to  hold  out  hopes  that 
we  might  some  day  allow  this,  and  the  expected  day  may 
now  be  approaching.  The  prospect  of  an  international 
agreement,  in  our  present  state  of  mind  and  legislation  on 
the  silver  question,  is  very  much  what  we  should  expect  if 
we  asked  a  man  who  was  thinking  of  the  gains  in  store  for 
him  from  selling  us  his  goods  at  an  exorbitant  price,  to 
join  us  in  buying  such  goods  and  paying  the  exorbitant 
price  to  somebody  else. 

If  the  proposed  international  agreement  is  not  practi- 
cable now,  or  in  the  immediate  future,  there  seems  to  be 
little  use  in  speculating  whether  it  may  be  practicable  in 


366         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

some  remote  future,  or  whether  it  would  be  desirable  if 
ever  practicable.  For  the  purpose  of  this  series  of  papers, 
the  principal  claims  of  Messrs.  Cernuschi  and  Walker  may 
be  freely  admitted.  It  might  even  be  granted  that  "  there 
is  not  gold  enough  in  the  world  to  do  the  world's  busi- 
ness "  ;  although  the  deficiency  is  known  to  be  fully  made 
up  by  certificates  of  credit,  such  as  bank  drafts  and  clear- 
ing-house paper,  through  which  about  nineteen  twentieths 
of  our  whole  volume  of  business  is  in  fact  done.  The  total 
currency  of  the  mercantile  world  is  now  made  up  of  at 
least  nineteen  parts  of  credit  to  one  of  hard  specie.  Since 
credit  depends  more  on  the  quality  than  the  quantity  of 
its  basis,  there  is  no  more  effectual  way  to  bring  about  a 
disastrous  contraction  and  paralysis  of  enterprise  than  by 
corrupting  the  coinage  ;  and  there  is  no  reason  why,  with 
sound  money  assured  us,  a  yet  larger  superstructure  of 
credit  could  not  be  built  on  the  foundation  we  have.  The 
need  of  a  large  amount  of  specie,  or  indeed  of  any  definite 
amount  of  specie,  for  business  purposes  is  by  no  means  the 
evident  essential  thing  that  it  is  often  made  to  appear.  I 
must  not  forget  to  point  out,  before  dismissing  the  bi- 
metallist  writers,  that  the  present  proposition  to  coin 
silver  without  provision  for  its  redemption  in  gold  or  for 
concert  of  action  with  European  countries,  is  as  directly 
opposed  to  their  teachings  as  to  those  of  all  other  econo- 
mists. They  advocate  two  standards  for  the  very  purpose 
of  escaping  abrupt  changes  of  value  and  price ;  this  prop- 
osition leads  inevitably  to  the  sudden  substitution  of  a 
silver  for  a  gold  unit  of  account — no  easy  transition,  but  a 
rude  collapse.  It  is  no  more  consistent  with  their  advice 
than  would  be  the  conduct  of  a  patient  who,  counselled  by 
his  physician  to  take  his  daily  airing  in  a  soft-cushioned 
carriage  and  so  avoid  lurches  and  jars,  complied  by 
attempting  to  leap  into  such  a  carriage  from  another 
when  both  were  moving. 


THE   SILVER    QUESTION.  367 

The  teachings  of  experience  have  greater  force,  how- 
ever, than  those  of  any  writer  or  school  of  writers.  To  the 
effects  of  the  Silver-Dollar  Act  of  1878  appeal  has  been 
made  by  some  free-coinage  partisans ;  whether  those 
effects,  properly  considered,  are  encouraging  or  discoura- 
ging for  their  project,  will  form  the  subject  of  our  next 
inquiry. 

PRESENT  AND  PAST  CONDITION  OF  THE  COINAGE. 

Experience  under  the  Coinage  Act  of  1878  is  said  to  have 
proved  that  the  United  States  can  sustain  a  bi-metallic 
currency  alone.  Surely  a  remarkable  claim  to  make,  on 
behalf  of  a  compromise  which  set  no  question  at  rest  and 
gave  no  satisfaction  ;  though  the  act  confessedly  survived 
the  proposed  amendments  by  which  it  was  attacked  either 
from  the  one  side  or  the  other  at  almost  every  session  of 
Congress  for  twelve  years,  and  so  long,  as  interpreted  by 
successive  heads  of  the  national  Treasury,  continued  to 
govern  us  unchanged.  Under  it  nearly  four  hundred 
million  silver  dollars,  making  a  sum  from  three  to  four 
times  as  great  every  year  as  the  total  silver-dollar  coinage 
in  the  ninety  years  between  the  adoption  of  the  Constitu- 
tion and  the  passage  of  the  act,  were  thrust  into  circula- 
tion ;  and  five  out  of  six  of  them  returned  immediately  to 
the  vaults  of  the  Treasury,  their  place  in  the  circulation 
being  filled  by  certificates.  These  certificates,  which  now 
form  so  important  a  part  of  the  circulation — amounting  to 
more  than  three  hundred  millions  and  therefore  nearly 
equalling  the  whole  outstanding  greenback  currency,— are 
practically,  therefore,  the  principal  outcome  of  that  piece 
of  legislation.  They  are  not  legal  tender,  except  in  pay- 
ment of  debts  due  the  government,  though  they  pass 
as  if  they  were  ;  but  there  is  no  reason  why  they  should 
not,  for  the  greenback  has  been  made  as  dependent  as 
they  on  the  value  of  the  silver  dollar,  and  the  coins  for 


368        ECOA'OA/ir  AND   INDUSTRIAL   DELUSIONS. 

which  they  are  exchangeable   on   demand   have  the  legal- 
tender  quality. 

Notwithstanding  this  copious  addition  to  the  currency, 
our  standard  of  values  continues  to  be,  not  two  metals, 
but  simply  gold  ;  all  other  kinds  of  money  in  circulation 
being  for  practical  purposes  gold  notes.  True,  the  silver 
dollar  is  not  redeemable,  and  has  a  bullion  value  of  eighty 
cents  or  often  even  less ;  but  it  does  the  same  work  in 
paying  taxes  as  its  nominal  equivalent  in  gold,  and  so 
long  as  the  government  receives  by  taxation  every  year 
a  sum  equal  to  all  the  silver  it  has  coined  in  twelve  years, 
the  government  will  doubtless  continue  to  assure  it  an 
enhanced  value.  But  that  is  not  alone  sufficient.  The 
money  received  by  government  is  promptly  paid  out  for 
pensions,  salaries,  and  other  expenses  ;  were  nothing  given 
it  but  silver,  it  would  have  nothing  else  to  pay,  and  the 
coin  could  gain  no  fictitious  value  by  its  action.  The 
essential  point  is  seen  in  the  strict  limit  set  to  this  coin- 
age, and  the  government  monopoly  of  it.  Greenbacks, 
which  now  circulate  along  with  silver  and  silver  certifi- 
cates, are  by  law  redeemable  in  coin,  which  the  Treasury' 
Department  has  interpreted  as  practically  meaning  gold. 
While  the  Treasury  continues  to  pay  gold  for  it,  and 
while  the  silver  certificates  continue  insufficient  for  the 
entire  work  of  a  national  currency,  the  greenback  will 
continue  both  to  command  its  face  value  in  gold  and  to 
carry  the  rest  of  the  currency  with  it.  Granted,  the 
holder  of  the  greenback  might  now  obtain  gold  for  it, 
and  might  obtain  abroad  with  that  gold  a  larger  quantity 
of  silver  than  his  note  could  command  in  silver  coin  at 
home — but  from  that  he  could  get  no  profit.  No  form  of 
silver  that  he  could  procure  would  in  any  way  bring  him 
more  than  its  bullion  value, — the  laws  against  counterfeit- 
ing are  strictly  enforced   in  this  country,  even  when  the 


THE   SILVER   QUESTION. 


371 


States,  from  the  foundation  of  the  first  mint  until  our 
abandonment  of  that  attempt  in  1853.  It  ought  to  be 
observed,  however,  that  the  volume  of  the  coinage  gives 
no  adequate  idea  of  the  relative  use  of  the  two  metals  as 
money ;  for  people  begin  to  send  abroad  the  better  coin 
and  use  the  worse,  .some  time  before  the  mint  finds  it  out. 
Considerable  gold  was  coined  at  our  mints  in  the  days 
when  it  commanded  a  premium  and  did  not  circulate  at 
all,  we  must  remember.  The  stamp  of  the  mint  is  a  con- 
venient guaranty  of  the  weight  and  purity  of  the  metal 
which  receives  it ;  hence  our  coins  are  always  welcome  to 
manufacturing  jewellers,  and  none  the  less  so  when  they 
fail  to  circulate  because  their  intrinsic  value  is  too  high. 
The  effect  of  overvaluing  one  of  the  money  metals  is 
therefore  seen  more  speedily  in  the  circulation  than  in 
the  Mint  Reports.  To  show  that  our  retrogression  to  a 
single  standard,  thus  retarded,  was  steadily  progressive,  I 
have  divided  each  period,  before  and  after  1834,  into 
three  parts : 


Dates. 

No. 
Years. 

Coinage 
Ratio. 

Average 
Market 
Ratio. 

Total   United   States 

Coinage,  in   Millions 

of  Dollars. 

Average 

Percentage 

Coined. 

Gold. 

Silver. 

Gold. 

Silver. 

1793-1805 
I 806- I 8 20 
1821-1833 
1834-1842 
1843-1849 
1850-1852 

13 

15 

13 

9 

7 
3 

15 

15 

15 

15-99 

15-99 

15.99 

15.53 
15.58 
15.80 

15-75 
15.86 
15-58 

2.5 

4.9 

4-5 

19.2 

54-3 
i5r-4 

1.9 

9-1 

25-3 

22.3 

17.8 

3.6 

57 
35 
15 
46 

75 
98 

43 

65 
85 
54 
25 
2 

The  last  two  columns  giving  the  average  percentage  of 
each  metal  coined,  with  the  falling  off  that  they  show  in 
the  relative  amount  of  the  undervalued  metal,  are  most 


372         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

instructive.  They  have  an  easy  lesson  for  us  in  pointing 
out  the  only  possible  result  to  be  anticipated  from  an- 
other vain  effort  after  the  bi-metallism  which  our  laws  up 
to  1853  purported  to  provide.  It  ought  to  be  admitted 
that  the  huge  coinage  of  gold  in  the  last  three  years  be- 
fore 1853  is  due  to  the  fact  that  then  did  California  first 
make  herself  felt  at  our  mints ;  but  that  fact  does  not 
explain  the  falling  off  in  silver  coinage,  from  two  and  a 
half  millions  to  little  over  one  million  per  annum,  which 
those  years  also  showed. 

No  fact  can  be  clearer  from  our  country's  experience,  I 
conclude,  than  that  free  coinage  at  an  arbitrary  ratio, 
though  advocated  in  the  name  of  bi-metallism,  always  de- 
feats bi-metallism,  and  banishes  the  undervalued  metal. 
As  already  admitted,  this  fact  of  experience  is  not  one 
that  must  necessarily  be  true ;  if  we  made  due  prepara- 
tion for  the  work,  and  started  the  right  kind  of  move- 
ment to  "  rig  the  market  " — and  if  we  proved  ourselves 
strong  enough — we  might  quite  possibly  prove  successful. 
But  none  of  our  free-coinage  friends  is  willing  to  enter 
upon  any  such  task ;  none  of  them  has  anything  to  pro- 
pose but  the  plan  followed  in  the  early  years  of  the  Re- 
public— a  plan  which  in  tw^o  distinct  trials  proved  a  hope- 
less failure.  We  have  never  had  a  bi-metallic  standard, 
whatever  our  laws  may  have  declared.  We  have  been 
able  to  use  gold  and  silver  together  as  money  only  by 
keeping  one  of  them  subordinate ;  limiting  its  amount  in 
circulation,  and  its  currency  as  legal  tender. 

The  country  is  far  stronger  and  far  richer  than  in  1834. 
Has  it  by  this  time  gained  that  power  to  fix  the  price  of 
silver  by  a  bold  declaration  of  its  purpose  to  do  so,  of 
which  it  then  proved  itself  so  lamentably  destitute  ?  That 
is  conceivable,  but  those  who  look  on  it  as  probable  are 
hearkening  to  their  hopes  rather  than  their  reason. 


THE   SILVER   QUESTION.  369 

metal  of  which  the  false  coins  are  made  is  itself  genuine 
and  of  full  weight, — hence  there  is  no  inducement  to  any 
one  to  buy  silver  abroad  by  sending  gold.  It  would  be  a 
speculation  very  much  like  that  of  buying  and  holding 
paper,  under  the  encouragement  of  the  high  artificial 
value  that  the  government's  stamp  is  able  to  give  to  that 
substance. 

The  object  of  this  paper  is  to  show  that  the  parallel 
circulation  of  gold  and  silver,  under  the  act  of  1878, 
affords  no  proof  whatever  that  our  whole  monetary  sys- 
tem would  not  lapse  to  a  silver  standard  with  the  introduc- 
tion of  "  free  coinage."  If  the  privilege  of  having  silver 
coined  into  dollars  were  open  to  every  possessor  of  silver, 
our  situation  would  become  radically  different  at  once. 
The  holder  of  gold  in  a  country  where  he  could  get  for  it 
only  sixteen  times  its  weight  in  silver  would  be  certain, 
as  soon  as  silver  acquired  an  exchange  value  not  depen- 
dent on  coinage  by^our  government,  to  send  it  to  some 
other  country  where  he  could  get  eighteen  or  twenty  for 
it  ;  and  he  would  be  equally  certain  to  put  none  of  it  at 
any  such  work  as  sixteen  parts  of  silver  could  do  equally 
well.  For  practical  purposes,  then,  gold  would  be  de- 
monetized in  this  country.  It  would  remain  "  legal  ten- 
der," of  course,  just  as  it  was  before  1834  or  from  1862  to 
1878;  but  it  would  become  the  mere  commodity  with  us 
that  it  was  then,  and  for  precisely  the  same  reason.  In 
point  of  fact,  the  thing  that  ''  free  coinage  "  would  do 
would  be  to  reproduce  for  us  the  conditions  before  the 
adjustment  of  coinage  in  1834,  in  an  exaggerated  form; 
for  the  difference  at  that  date  between  coinage-ratio  and 
exghange-ratio  of  the  two  metals  was  only  that  between 
15  and  15.8,  while  it  is  now  far  more  disproportionate; 
then  the  work  of  exchange  between  this  country  and 
Europe  was  done  on  a  small  scale,  by  slow  sailing-vessels, 


370        FXONOMIC  AND   INDUSTRIAL   DELUSIONS. 

while  now  we  have  not  only  "  ocean  greyhounds "  but 
ocean  telegraphs. 

The  coinage  act  of  1834,  it  will  be  remembered,  was 
passed  for  the  express  purpose  of  retaining  gold  in  the 
country  as  money  ;  we  were  then  under  the  nominally 
bi-mctallic  system  now  advocated,  which  had  become 
in  fact  exactly  what  it  would  inevitably  again  become 
under  the  manipulation  of  the  free-coinage  men  of  this 
day,  exclusively  a  silver  system  :  and  the  only  available 
device  for  holding  gold  was  found  to  be  a  debasement  of 
the  gold  dollar.  As  a  matter  of  course,  gold  was  debased 
too  far — was  reduced  in  weight  from  the  fifteenth  to  the 
sixteenth  of  the  silver  dollar,  the  commercial  ratio  of  the 
two  metals  being  between  the  two  figures — with  the  neces- 
sary consequence  that,  before  twenty  years  were  over, 
silver  had  disappeared  as  gold  before  it,  and  the  only 
resource  was  to  debase  silver  in  turn.  Had  the  debased 
silver  been  made  an  unlimited  legal  tender  and  coined  in 
unlimited  quantities  in  the  readjustment  of  1853,  the 
experience  previous  to  1834  would  of  course  have  been 
repeated,  and  the  net  result  of  twenty  years'  progress 
would  have  been  two  acts  providing  for  partial  repudia- 
tion of  debts.  Fortunately,  however,  wiser  counsels  pre- 
vailed in  1853  ;  the  debased  silver  was  made  legal  tender 
only  for  limited  payments,  and  could  therefore  be  used  as 
money  without  disturbing  the  basis  of  credit.  The  silver 
dollar  was  not  debased  along  with  the  minor  coins,  simply 
because  that  was  believed  unnecessary ;  for  that  dollar 
had  already  been  replaced  by  a  small  gold  piece,  and  was 
no  longer  coined  except  in  insignificant  amounts. 

To  show  the  inevitable,  though  sometimes  gradual, 
effect  of  attempting  "  bi-metallism  "  with  a  coinage  value 
different  from  the  market  value,  I  have  made  out  a  table 
giving  the  amount  (^f  each  metal  coined  by  the  United 


THE   SILVER   QUESTION.  373 

THE     "crime"    of    1873. 

The  difference  between  the  law  and  the  fact  is  always 
showing  itself,  as  we  follow  the  course  of  financial  history. 
The  thing  that  our  law  undertakes  to  furnish  is  not  the 
thing  that  our  experience  gives  us  ;  and  not  uncommonly 
the  same  law  works  for  a  time  in  one  way  and  afterward 
in  a  very  difTerent  way.  We  have  seen  a  bi-metallic  cur- 
rency carefully  prescribed  and  provided  for  the  United 
States,  so  far  as  it  was  in  the  power  of  the  law  to  do  this, 
placing  the  two  metals  on  an  exact  equality  until  1853, 
and  have  observed  that  in  changing  the  status  of  the 
small  coin  in  that  year,  the  lawmakers  neglected  the 
already  obsolete  silver  dollar.  They  thus,  while  recog- 
nizing the  subordinate  place  that  silver  must  thereafter 
hold  in  our  currency,  left  a  loophole  through  which  it 
might  enter  in  copious  floods  and  drive  out  gold  when 
changing  conditions  brought  about  a  change  in  the  rela- 
tive value  of  the  two.  That  loophole,  existing  through 
oversight  rather  than  design,  was  closed  in  1873,  by  an  act 
to  provide  new  regulations  for  the  mint ;  this  act  ex- 
plicitly stopped  the  coinage  of  silver  dollars  of  4I2|-  grains 
weight,  and  allowed  but  a  limited  legal-tender  function  to 
any  part  of  the  silver  coinage.  Thus  the  state  of  the 
coinage,  as  it  had  been  settled  in  1853,  was  made  per- 
manent. 

The  Mint  Act  of  1873  has  been  subjected  to  bitter  de- 
nunciation from  those  who  suffer,  and  those  who  imagine 
that  they  suffer,  from  the  closing  of  the  silver-dollar 
loophole.  In  fact,  it  has  grown  to  be  a  real  shibboleth  of 
true  "  friends  of  the  white  metal,"  to  call  that  act  some 
kind  of  "  crime  ;  "  as,  for  instance,  when  one  of  them 
assures  us  that  it  "  must  stand  in  history  as  the  crime  of 
the  age."  As  a  matter  of  fact,  however,  it  passed  after 
full  discussion,  and  with  little  or  no  opposition  ;    and  it 


374        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

was  received  with  such  general  acquiescence  and  even 
satisfaction  that  the  pathetic  excuses  afterwards  made  by 
some  who  had  joined  in  enacting  it — their  piteous  appeals 
that  the  kindly  shelter  of  the  Baby  Act  might  cover  their 
complicity — excite  less  commiseration  than  contempt. 
True,  the  silver  dollar  of  41 2|-  grains,  whose  coinage  was 
then  suspended,  had  recently  come  a  little  more  into 
demand;  our  mints,  which  from  1793  to  1868  coined  only 
4,600,000  of  these  dollars,  had  issued  in  the  following 
four  years,  1869  to  1872,  no  fewer  than  3,100,000  of  them, 
for  foreign  trade  exclusively  ;  but  that  loss  was  more  than 
compensated  by  the  new  "  trade  dollar  "  then  provided, 
which  better  fulfilled  the  only  use  for  which  the  silver- 
dollar  was  in  those  days  desired.  When  and  wherein  did 
the  "  criminality  "  of  the  act  become  manifest  ? 

The  United  States  produced  very  little  silver  before 
the  Civil  War.  The  production  of  the  country  has  since 
advanced  by  steady  strides ;  its  mines  had  already  in 
1873  begun  to  furnish  more  than  $30,000,000  worth,  or 
two  fifths  of  the  world's  supply  of  that  metal,  and  in 
increasing  their  yield  to  $50,000,000  they  have  kept  pace 
with  the  world's  increase,  and  still  maintain  the  same  pro- 
portion of  two  fifths.  The  present  annual  product  of  silver 
from  this  country  alone  is  greater  than  the  whole  world 
ever  obtained  in  any  year  before  1865.  The  one  striking 
fact  in  the  recent  history  of  silver  is  this  enormous 
increase  in  its  production  by  the  world  at  large  and 
particularly  by  this  country ;  and  to  that  fact  we  owe  all 
the  denunciations  heaped  upon  the  Mint  Regulation  Act. 
It  affects  our  problem  in  two  ways. 

So  unprecedented  an  increase  in  the  supply  could  not 
be  without  effect  on  the  price  of  the  article.  The  only 
inference  to  be  drawn  from  the  frantic  efforts  that  are 
made  to  explain   in  some  other  way  the  remarkable  fall 


THE   SILVER   QUESTION.  375 

in  the  value  of  silver  since  1873,  is  that  that  metal  is  really 
believed  to  be  the  one  valuable  in  all  this  universe  which 
disobeys  the  inexorable  law  of  supply  and  demand.     But 
that  is  an  idle  superstition.     It  is  worth  while  to  observe 
that   the   price    of    silver   had    been    slowly  but   steadily 
falling,  even  before  1873;  having  stood,  for  the  mean  of 
six  years,  1867  to   1872,  at    i  to  15.59,  while  the  mean  of 
six  years  just  preceding,  1861  to  1866,  was  i  to  15.41,  and 
that   of   1855   to    i860  was    i   to   15.32;    and   the   greatly 
accelerated  decline   that   began  in    1873  closely  followed 
a  rapidly  increased    production  of  silver   in   the   United 
States:  for  1870,  $16,000,000;  for  1871,  $23,000,000;    for 
1872,  $29,000,000;    for  1873,  $36,000,000.      With    these 
facts  in  view,  we   can  easily  estimate  at  its  just  value  the 
pretence   that  the   "crime"  of   1873  caused  the  decline. 
The  truth   is   almost  opposite  ;    the    decline    is    the    sole 
cause   of  the   appearance   of  the    1873  act   in  a  criminal 
role.     Immediately  and  practically,  the  "  crime  "  did  not 
affect  the  standing  of  silver  in  the  smallest  degree.     At 
that    time,   neither    metal  was   used   as   currency  in  this 
country.     No    other    country    was    bound    by   our  legal- 
tender    laws  ;    and   yet   the   decline   was    felt,    of  course, 
everywhere.     The   German    Empire   made   an   important 
coinage  reformation  between  1871  and  1875,  substituting 
order  for   the   chaos   of   irreconcilable   systems  that   had 
previously  oppressed  the  country  ;  and  owing  to  the  limit 
set  in  its  reformed  coinage  on  the  legal-tender  function 
of  silver,  much  mischief  is  ascribed  to  that  precaution  of 
the  Germans.      But  their  change  was  so  obviously,  like 
the  suspension  of  silver  coinage  among  the  Latin  nations, 
an  effect  and  not  a  cause  of  the  changing  value  of  silver, 
that  we  need  give  it  little  consideration.     The  attempt  of 
that  country  to  sell  surplus  silver  in  other  countries  may 
have  contributed   to   the   decline  in  price  ;    but  no  such 


376        ECOXOMIC  AXD  JNDUSTRlAf,    DJJ.rslOXS. 

effect  could  have  followed  it  if  that  decline  had  not  been 
already  started  by  the  increased  supply. 

The  rapid  development  of  silver  production  affects  our 
problem  in  another  and  more  dangerous  way.  It  has 
created  an  "  interest,"  which  our  legislators  feel  under 
obligation  to  recognize,  conciliate,  and  protect ;  an  alert, 
calculating,  exacting  "  interest,"  determined  as  a  clear 
perception  of  speedy  gains  on  the  one  hand  and  tardy 
gains  on  the  other — plausible  as  approved  skill  and 
sharpened  wits — powerful  as  great  wealth  and  perfect 
combination — can  make  it.  To  the  silver  interest  the 
bitterest  denunciations  of  hostile  legislation  come  easy 
enough. 

Neither  of  these  two  factors  can  be  rejected  in  account- 
ing for  the  free-coinage  cry.  Let  us  inquire  into  the 
operation  of  each  successively. 

LEGISLATION    IN    FAVOR    OF    THE    DEBTOR. 

To  the  question  already  asked,  what  "  other  object  "  the 
professed  champions  of  a  currency  based  equally  on  gold 
and  silver  can  have  in  advocating  a  measure  which  could 
give  us  no  such  currency,  one  easy  answer  is  at  once  sug- 
gested by  the  recent  cheapening  of  the  inferior  metal : 
that  contracts  may  be  carried  out  and  debts  paid  at  less 
cost.  That  the  man  who  engages  to  give  the  value  of  ten 
hours'  work,  say,  may  discharge  his  obligation  with  eight 
hours.  The  desire  to  shirk  is  about  as  strong  as  any  that 
exists  in  the  human  breast ;  and,  where  opportunity  is 
given,  few  indeed  are  they  who  would  hesitate  to  seize  it. 
When  it  is  realized  that  "  free  coinage  "  may  give  us  ten 
silver  dollars  at  the  same  cost  in  produce  or  labor  that  we 
now  incur  for  eight,  and  each  of  them  equal  to  any  of  the 
eight  in  debt-discharging  power,  the  longing  for  free 
coinage  is  easy  to  understand.     That  that  longing  may  be 


THE   SILVER    QUESTION.  377 

active  and  ardent  enough  to  determine  congressional 
elections,  and  call  out  statesmen  pledged  to  gratify  it, 
need  not  surprise  us. 

It  is  a  rock-ribbed  certainty  that  any  desire  which  is 
strong  enough  and  widespread  enough  will  elect  many 
of  its  advocates  to  Congress.  But  it  is  by  no  means  cer- 
tain that  all  strong  and  widespread  desires  ought  to  be 
carried  out.  And  the  policy  of  facilitating  the  partial 
repudiation  of  debts,  of  impairing  the  obligation  of  con- 
tracts, is  one  which  can  be  conclusively  shown  to  be  bad 
in  the  long  run  for  all  classes  of  society  without  exception  ; 
bad  for  those  who  incur  obligations,  along  with  those  who 
give  the  value  of  service  for  which  obligations  are  in- 
curred. This  is  after  all  only  an  application  and  slight 
extension  of  the  old,  often  heard,  but  not  always  heeded, 
principle  that  "  the  best  policy  is  honesty." 

But  how  is  this  ?  How  can  it  be  better  foi»  borrowers 
as  well  as  for  lenders,  that  debts  should  be  discharged  in 
full  according  to  the  contract  ?  Surely  the  former  class 
must  gain  by  any  legislation  which  lightens  the  debt? 
No,  not  as  a  class,  and  in  the  long  run.  It  may  readily  be 
granted  that  to  poor  John  Doe,  whose  little  farm  is  under  a 
thousand-dollar  mortgage,  any  act  which  enabled  him  to 
clear  himself  by  paying  a  value  that  he  could  call  a  thou- 
sand while  it  cost  only  eight  hundred,  would  be  a  great 
relief  at  the  moment;  but  how  about  his  neighbor,  Richard 
Roe,  who  might  be  obliged  to  borrow  money  on  another 
farm  at  that  very  time  ?  How  about  Doe  himself,  who 
might  have  to  renew  his  mortgage,  or  raise  more  money 
by  the  same  means  ?  It  is  certain  that  the  terms  on  which 
this  could  be  done  would  become  decidedly  less  favorable 
to  the  debtor.  If  the  conditions  are  made  by  law  in  any 
way  disadvantageous  to  the  lender,  there  will  inevitably 
be  fewer  lenders,  and  less  money  available  to  borrowers ; 


37<^         /'-CONOA//C  AND  INDUSTRIAL   DELUSIONS. 

the  law  of  demand  and  supply  will  therefore  work  ad- 
versely to  the  latter.  This  adverse  working  is  brought 
about,  of  course,  by  adjustment  of  the  interest  on  money, 
a  name  denoting  what  its  holder  has  to  be  paid  for  the 
difference  between  its  present  value  to  him,  and  that  of 
his  expectation  of  it  a  year  hence.  Any  act  or  law  which 
scales  down  debts,  has  necessarily  the  effect  of  impairing 
the  confidence  of  the  man  with  money  to  lend,  that  the 
value  he  is  to  receive  next  year  will  be  as  much  as  he  gives 
this  year  ;  the  difference  between  present  value  of  present 
money  and  of  future  money  will  therefore  be  higher,  and 
must  be  met  by  higher  interest.  Or,  if  the  higher  interest 
cannot  be  paid,  the  would-be  borrower  must  suffer  the 
refusal  of  a  loan,  and  thus,  as  an  indirect  consequence  of 
the  very  act  by  which  he  expected  to  benefit,  must  have 
to  complain  of  hard  times. 

It  thus  appears  that  legislation  for  the  relief  of  those 
who  have  borrowed  is  legislation  adverse  to  those  who 
would  borrow,  and  favors  the  "  debtor  class  "  of  to-day  at 
the  expense  of  its  successor  to-morrow.  Would  not  an 
act  which  favored  the  creditor,  by  adding  to  the  value 
of  his  investment,  have  an  exactly  contrary  tendency? 
Would  not  the  necessary  effect  of  such  an  act  be  to 
increase  the  money  at  the  disposal  of  those  in  temporary 
need  of  it,  and  thereby  to  render  easier  the  conditions  on 
which  it  is  to  be  had  ?  Must  not  the  rate  of  interest  fall 
when  two  lenders  have  to  run  after  each  borrower,  as  cer- 
tainly as  it  rises  when  each  lender  is  sought  by  two  bor- 
rowers? I  do  not  insist  that  our  national  legislature 
should  be  driven  into  passing  acts  of  the  kind  suggested 
by  these  questions,  but  I  am  quite  justified  in  asking 
that  the  points  brought  out  by  them  should  receive  due 
consideration,  along  with  those  made  on  the  other  side. 

It  may  be  believed,  and   quite  a  strong  case  may  be 


THE   STLVKK    QUESTION.  379 

made  out  to  support  the  belief,  th^it  there  would  be  more 
good  than  harm  in  legislation  increasing  value  of  invest- 
ments— legislation  openly  favoring  the  "  creditor  class." 
It  has  already  been  shown  that  such  legislation  would 
bear  hard  only  on  those  already  in  debt  and  not  on  any 
who  are  hereafter  to  be  in  debt ;  so  that  we  have  to  con- 
sider only  the  effect  on  present  debts.  Who,  then,  form 
the  most  important  part  of  the  "creditor  class"  in  our 
country?  "Bloated"  holders  of  the  bonded  debt  of  the 
government  ?  "  Shylocks  "  who  have  mortgages  on  West- 
ern farms?  It  is  safe  to  say  that  for  every  creditor  in 
either  of  these  classes  there  are  a  hundred  investors  in 
savings  banks,  building  associations,  etc.,  whose  small 
saving,  the  result  of  years  of  toil  and  self-denial,  is  abso- 
lutely at  the  mercy  of  legislation  affecting  the  value  of 
the  dollar  ;  or  a  thousand  working  men  in  arrears  of  wages, 
whose  reward  must  be  depreciated  by  debasement  of  the 
standard — who  can  only  claim  the  same  nominal  sum  from 
their  employers,  that  is  to  say,  and  have  to  suffer  by  the 
diminished  purchasing  power  of  that  sum  if  the  unit  of 
reckoning  is  debased.  Working  people  are  uniformly 
creditors,  to  an  extent  not  generally  known  or  realized. 
It  has  been  estimated  that  the  amount  due  them  averages 
fully  a  hundred  million  dollars  ;  twenty  per  cent,  coinage 
debasement  would  result  in  a  direct  and  immediate  loss 
to  this  class,  least  able  to  bear  it,  of  over  twenty  million 
dollars  on  account  of  wages  due.  The  contrast  between 
"poor  debtor"  and  "  rich  creditor"  is  one  often  drawn  in 
poetry  and  rhetoric,  and  with  respect  to  some  kinds  of 
debt  that  contrast  really  exists ;  but  it  is  a  great  mistake 
to  suppose  that  it  exists  generally.  The  very  poor  are 
not  debtors,  because  they  can  obtain  no  credit ;  they  are 
often  creditors,  because  they  are  obliged  to  submit  to  that 
condition.     Notwithstanding  our  natural  sympathy  with 


380         F.CONOMIC  AMD   TMDUSTRIAl.    DELUSIONS. 

the  cries  of  those  who  have  debts  to  pay,  we  must  remem- 
ber that  it  is  not  among  them  that  we  must  look  to  find 
the  poorest  and  most  wretched.  Legislation  to  relieve 
them  is  no  aid  to  the  class  of  our  population  Tnost  in  need 
of  relief. 

I  must  repeat,  and  I  cannot  repeat  too  earnestly,  that 
my  object  in  calling  attention  to  these  points  is  to  show 
that  the  question  has  another  side,  considered  merely  as  a 
question  of  policy  or  pity.  But  the  question  cannot  be 
so  decided.  So  long  as  we  undertake  to  balance  the 
"  claims  "  of  one  class  of  citizens  against  those  of  another, 
or  to  decide  who  has  the  best  title,  in  misfortune  or  even 
in  private  virtue,  to  government  favor — so  long  have  we  to 
proceed  through  a  trackless  sea  without  chart  or  compass, 
so  long  is  our  task  too  mighty  for  human  faculty.  The 
course  of  government  first  becomes  clear,  when  it  ceases 
to  listen  which  party  can  utter  the  loudest  cry,  but  con- 
siders only  the  counsels  of  Justice.  Justice  of  the  band- 
aged eye — Justice  with  partiality  for  no  class — to  that 
arbiter  alone  let  us  listen.  What  has  Justice  to  say  to 
the  scheme  of  making  all  debts  payable  in  silver,  coined 
in  unlimited  quantities  for  the  sole  benefit  of  the  holder 
of  the  bullion,  a  dollar  for  every  4i2|-  grains? 

Were  it  true,  as  we  are  told  by  the  unlimited-coinage 
schemers,  that  both  metals  together  formed  our  standard 
of  value  until  1873,  at  which  date  one  of  them  was  "de- 
monetized "  by  a  "  crime  "  of  some  kind  against  it,  the 
answer  might  be  different.  But  since  that  is  not  true; 
since  neither  our  own  nor  any  nation  has  ever  had  at  the 
same  time  two  standards  of  value — though  its  laws  may 
have  been  such  as  to  allow  a  change  from  one  standard  to 
another,  as  circumstances  of  production  changed  ;  since 
silver  was  not  demonetized  by  the  Mint  Act  of  1873,  its 
use  as  money  having  at  once  largely  increased  under  that 


THE   SILVER    QUESTION.  381 

very  act ;  since  gold  has  been  in  fact  our  standard  unin- 
terruptedly from  1834  to  the  present  hour,  excepting  the 
seventeen  years  when  we  were  forced  to  make  all  values 
depend  on  the  prospect  of  obtaining  gold  for  a  government 
promise  to  pay  it ; — in  view  of  this  state  of  facts,  there  can 
be  no  serious  question  that  existing  contracts  are  based  on 
gold  values,  and  that  only  gold  or  some  accepted  repre- 
sentative of  gold  can  justly  discharge  them. 

THE    CRY    FOR    MORE    MONEY. 

"  Hard  times  "  are  popularly  associated  with  a  scarcity, 
and  "  flush  times  "  with  a  plenty,  of  currency.  The  gov- 
ernment is  credited  with  power  to  make  currency  scarce 
or  plenty  by  legislation.  Legislative  measures  for  increas- 
ing the  volume  of  the  currency,  therefore,  never  lack 
advocates.  No  subject  is  more  important  for  us  to  con- 
sider, than  whether  such  measures  are  capable  of  bringing 
about  the  desired  end,  and  whether  they  may  not  accom- 
plish more  mischief  than  good  in  the  effort. 

In  the  first  place,  I  must  deny  the  existence  of  any 
such  relation  between  hard  or  flush  times  and  the  volume 
of  currency  in  circulation,  as  is  popularly  believed.  There 
is  a  good  deal  to  explain  such  a  belief,  I  admit.  The 
pioneer  or  dweller  in  remote  country  districts,  who  has 
learned  the  use  of  money  and  is  forced  to  dispense  with 
it,  keenly  feels  the  inconvenience  of  his  lack  of  cash.  The 
farmers,  to  whom  experience  has  taught  the  usefulness  of 
an  ample  currency  in  hand  when  the  time  comes  to  "  move 
their  crops,"  are  its  natural  advocates.  Business  houses, 
when  they  have  to  meet  a  call  for  cash  while  their  assets 
are  not  readily  convertible,  appreciate  the  ills  of  "  tight 
money"  as  much  as  anybody,  and  are  as  ready  to  join  in 
movements  to  make  money  easier.  But  there  is  no  proof 
in  any   of  these   facts  that   a  large   amount  of  currency 


382         KCONOATIC  A.\'D    lA'DUSTNIA I.    DELUSIONS. 

would  make  the  burden  permanently  lighter  ff)r  those 
who  now  complain. 

Financially,  an  easy  condition  seems  never  to  arise  from 
the  possession  of  a  large  supply  of  currency,  though  it 
may  be  brought  about  by  an  increased  supply.  The 
stimulus  to  business  is  given  by  the  act  of  putting  more 
money  in  circulation  ;  but  after  the  increase  has  ceased, 
the  stimulus  disappears  ;  business  is  no  more  active,  no 
more  secure  against  another  period  of  depression,  with 
the  larger  currency  circulation,  than  it  had  been  with  the 
smaller.  In  this  there  is  a  likeness  to  certain  drugs, 
whose  effect  on  the  system  can  be  kept  up  only  by  con- 
tinual increases  in  the  dose ;  the  stronger  dose,  taken 
constantly,  having  no  more  stimulative  power  than  had 
the  weaker  one  before.  Bearing  this  in  mind,  remember- 
ing that  the  relief  to  be  had  from  an  increased  currency 
is  necessarily  only  temporary  in  its  duration,  we  are  led 
to  consider  the  more  lasting  effects  of  the  increase,  which, 
if  the  addition  is  currency  of  a  quality  inferior  to  that 
previously  circulating,  cannot  but  be  evil.  The  bad 
money,  as  was  long  ago  pointed  out,  must  drive  out  the 
good.  The  increased  currency  supply  will  thus  bring 
temporary  relief  only  at  the  cost  of  permanent  injur}'. 

Another  grave  objection  to  the  inflated  circulation  of 
silver,  and  of  notes  representing  silver,  proposed  as  a 
means  of  appeasing  the  hunger  for  "  more  money,"  is  the 
difficulty  of  getting  the  money  into  the  hands  of  those 
who  are  calling  for  it."  We  must  remember  that,  while  a 
lamentable  deficiency  of  money  is  complained  of  in  some 
quarters,  at  the  very  same  moment  there  is  a  surplus  of  it 
in  others — great  hoards  of  it  lying  idle,  vainly  seeking  a 
borrower  on  good  security  at  unprecedentedly  low  interest. 

'  To  a  paper  on  "  Money  P'allacies,"  by  Clarence  E.  Dutton,  Major  U.S.A. 
(before  the  Philosophical  Society  of  Washington)  the  author  is  here  under 
obligations. 


THE   SILVER    QUE  ST/0  A'.  383 

Such  additions  as  Congress  might  make  to  the  circulation 
would  probably  go  only  to  increase  these  hoards.  Why  ? 
Because  the  government  cannot  be  expected,  any  more 
than  the  bankers,  to  part  with  value  on  inferior  security  ; 
and  if  private  money  finds  no  better  investment  than  in 
mere  storage,  or  in  supplying  the  languid  demand  which 
is  the  best  for  which  good  security  is  to  be  had,  public 
money  must  follow  the  same  course,  unless  forced  into 
another  course.  There  are  propositions  in  abundance,  it 
is  well  known,  for  compelling  another  disposition  of  the 
desired  inflation  of  public  money  than  would  be  permitted 
by  sound  business  principles ;  but  are  any  of  them 
deserving  of  serious  attention?  Is  it  not  fully  enough  to 
say  of  such  projects,  as  that  of  lending  money  at  low 
interest  to  any  one  who  will  furnish  real  estate  security 
for  the  loan,  that  if  private  money  is  not  to  be  had  on  the 
terms  offered,  the  government — that  is  to  say,  the  tax- 
payer who  sustains  it — is  asked  to  do  for  nothing,  a  favor 
which  is  worth  money  ;  is  asked  to  make  a  present  in  the 
guise  of  a  loan,  of  money  extorted  by  taxation  ;  is  asked 
to  turn  over,  without  compensation,  to  some  citizens  the 
property  of  others?  Practically,  therefore,  there  is  no 
way  in  which  the  demand  for  more  money  can  be  met 
by  government  that  can  afford  any  real  relief,  and  be 
at  the  same  time  clear  of  what  amounts  to  legalized 
spoliation. 

It  should  also  be  borne  in  mind  that  the  economic  dis- 
order, diagnosed  by  plausible  political  quacks  as  lack  of 
currency,  is  often  something  different,— lack  of  capital. 
In  order  to  move  the  crop,  or  make  the  needed  improve- 
ment, it  is  wealth  that  is  needed,  and  not  particularly 
wealth  in  a  convertible  and  portable  form.  The  need  is 
no  less  serious  for  that  ;  it  is,  indeed,  too  serious  to  be 
curable  by  increasing  the  currency. 


384         ECONOMIC  AXD   INDUSTRIAL    DELUSIONS. 

The  reply  to  any  proposition  for  supplying  the  people 
with  more  money,  if  the  addition  is  to  be  of  an  inferior 
quality,  and,  therefore,  of  a  tendency  to  (irive  off  or 
depreciate  what  is  already  in  circulation,  should  therefore 
be  in  almost  all  cases  a  decided  negative.  Only  the  most 
pressing,  most  urgent  national  distress  can  justify  the 
step.  As  a  remedy,  it  is  too  dangerous,  and  too  likely 
either  to  fail  in  reaching  the  complaint,  or  to  prove  no 
remedy  when  the  complaint  is  reached.  As  has  been 
shrewdly  said,  the  government  is  omnipotent  to  make 
money,  but  pitiably  feeble  to  give  value  to  the  money  it 
makes ;  and,  after  all,  it  is  value  that  we  want  as  a  basis 
to  our  monetary  system,  for  we  are  as  incapable  of 
measuring  value  by  that  which  is  without  value  as  of 
measuring  length  by  something  without  length.  Where 
credit  is  good,  and  business  methods  sound,  more  can  be 
done  with  a  small  basis  of  reliable  money  than  with  a 
much  larger  basis  of  doubtful  money. 

The  certainty  that  the  free  coinage  of  silver  would  at 
first  give  us  a  large  increase  of  money  in  circulation,  and 
the  strong  probability  that  that  increase  might  finally 
surpass  what  we  should  lose  by  exportation  of  under- 
valued gold,  are  far  from  being  the  convincing  arguments 
in  favor  of  the  measure  that  they  appear  to  many  minds. 
Silver  inflation  must  be  very  much  like  paper  inflation  in 
its  effects ;  the  inflated  prices  resulting  upon  it  w^ould 
have  a  lower  limit,  doubtless,  because  the  silver  dollar  has 
a  real  value  approaching  its  artificial  value  ;  but  they 
would  reach  their  limit  more  promptly,  because  the  hope- 
lessness of  any  redemption  for  the  depreciated  money 
would  be  sooner  felt.  The  additional  circulation  must 
pass  into  the  hands  of  the  holders  of  silver  bullion  ;  and 
how  it  is  to  go  from  these  to  the  aid  of  those  in  need  of  a 
larger   currency,    is   not   shown.       The   only    aid    that    it 


THE    SILVER    QUESTION.  385 

could  possibly  bring  would  be  to  those  now  in  debt  who 
would  gain  not  by  the  increased  quantity,  but  by  the  de- 
preciated quality  of  the  money  of  account. 

A  wild  and  terrible  tale  of  woe  has  been  going  the 
rounds  of  the  papers  "  friendly  to  silver,"  in  which  the 
shuddering  listener  is  told  of  the  fell  work  of  our  mis- 
guided government  when  it  "  destroyed  half  the  money 
in  the  world  "  on  that  ill-starred  day  in  1873,  ^"^  arbitra- 
rily caused  "  silver  to  fall  as  compared  with  gold."  "  This 
fable  teaches  us,"  it  appears,  the  fearful  results  of  dimin- 
ishing the  money  supply,  and  the  crying  need  of  increas- 
ing the  same.  Attention  has  already  been  called  to  the 
large  increase  in  the  use  of  silver  as  money  under  the  act 
which  is  said  to  have  "  demonetized  "  that  metal ;  the 
mint  reports  show  that  the  coinage  of  silver  money  rose 
at  once  to  a  higher  figure  than  had  been  reached  since 
1 86 1,  and  already  in  1876  and  again  in  1877  more  of  such 
money  was  coined  than  in  any  previous  year  since  the 
foundation  of  the  government. 

The  clause  of  the  Mint  Act  which  prevented  the  silver 
dollar  from  usurping  the  place  of  gold  as  a  standard  of 
values  and  finally  banishing  it  altogether,  could  have  had 
no  immediate  influence  on  the  standard,  which  was  in 
those  years  neither  silver  nor  gold,  but  depreciated  paper. 
In  fact,  at  the  time  when  the  fable  tells  us  that  our  law 
was  hurling  down  the  price  of  silver,  it  was  in  reality  hav- 
ing no  appreciable  effect  at  all.  But  fable  ought  to  be 
confronted  with  fact  at  another  point  ;  where  the  fall  in 
price  of  other  forms  of  property  is  ascribed  to  the  act  in 
question. 

The  fall  was  really  due,  as  is  well  understood  by  all  who 
are  not  dupes  of  one  or  another  class  of  Protectionist 
plotters,  to  improvements  in  methods  of  production  and 
economical   transportation  ;   which   cheapened   gold  itself 


386         KCONOMIC  AA^D   JMjynSTR/A L   /)/■:/./ 'S/OA''S. 

in  some  degree,  but  not  in  nearly  the  same  degree 
as  the  commodities  compared  with  it.  The  proof  of  this 
is  plain,  when  we  consider  expenses  unaffected  by  these 
improvements :  as  wages  of  labor,  which  have  not  fallen, 
and  rent  of  land  for  business  purposes,  which  has  gener- 
ally risen.  In  reality,  therefore,  the  evil  which  it  is  pro- 
posed to  cure  by  a  pretended  increase  in  the  volume  of 
legal-tender  money,  and  a  practical  limiting  of  legal  tender 
to  silver  and  representatives  thereof,  has  no  existence. 

PROTECTION    TO    THK    MINE-OWNERS. 

Neither  of  the  two  cravings  I  have  considered,  that  for 
cheaper  money  to  make  debt-paying  easier,  or  that  for 
more  money  to  "  lubricate  the  wheels  of  commerce  "  and 
"  restore  confidence  to  business,"  would  ever  have  been 
powerful  enough  to  bring  upon  us  the  silver  agitation,  but 
for  the  co-operation  of  a  redoubtable  ally.  For  debt-sealers 
and  inflationists  we  have  always  with  us  ;  there  has  been 
nothing  to  give  them  greater  cogency  or  even  plausibility 
since  they  hitched  themselves  to  the  silver  car  than 
before  ;  the  fact  that  they  seek  temporarj^  relief  to  them- 
selves at  the  cost  of  lasting  inconvenience  to  those  with 
whom  they  ought  to  be  most  in  sympathy — advocate  a 
remedy  which  is  less  sure  to  satisfy  any  one  than  to  excite 
a  cry  for  further  doses — has  been  as  evident  as  in  all 
history  heretofore  ;  they  have  already  been  defeated  in 
the  battle  over  "  fiat  money,"  and  would  not  now  be  for- 
midable but  for  the  partnership  into  which  they  have  had 
the  fortune  to  enter. 

The  unparalleled  increase  in  the  product  of  silver,  to 
which  its  equally  unparalleled  fall  in  price  is  undoubtedly 
due,  was  brought  about  by  more  than  one  cause.  Not 
only  did  rich  new  deposits  reward  the  prospector,  but  the 
cost  of  extracting  from  them  the  pure  metal  by  improved 


THE    SILVER    QUESTION.  387 

processes,  and  of  carrying  it  to  market  by  the  Pacific 
railroads,  was  greatly  diminished.  The  mining  combina- 
tion needed  no  instruction  to  perceive  the  princely  profit 
possible  to  it,  if  it  could  use  the  means  provided  by 
nature  and  man  for  cheapening  production  without  being 
subject  to  the  inconvenience  of  tower  prices ;  or  to  act 
thereon  with  all  its  shrewdness  and  energy.  Its  interest 
has  always  been  plain  as  a  pike-staff,  and  no  doubt  of  the 
entire  devotion  of  its  Congressional  representation  has 
ever  been  raised.  While  its  members  have  continued  to 
furnish  an  admirable  example  of  ardor  in  a  common  cause, 
all  others  have  been  divided  and  irresolute,  thus  affording 
the  determined  minority  an  opportunity  which  it  was  not 
slow  to  seize.  But  how,  it  will  be  naturally  asked,  came 
this  to  be  permitted  ?  How  has  it  ever  been  possible  for 
a  few  silver  men  to  bend  a  legislative  majority  to  their 
interests  ?  How  has  it  been  possible  to  conceal  the  fact 
that  any  gain  which  they  could  draw  from  complaisant 
acts  of  Congress  must  be  at  the  general  cost  ?  The 
answer  is  no  simple  one,  for  several  causes  have  contribu- 
ted ;  but  the  most  important  source  of  strength  to  the 
silver  combination  and  of  weakness  to  the  rest  of  the  Re- 
public has  been,  I  do  not  hesitate  to  say,  the  protective 
superstition. 

It  happened  very  luckily  for  the  silver  interest,  that  the 
days  in  which  it  had  to  approach  legislative  halls  with  its 
axe  to  grind,  were  those  when  the  country  was  so  abject 
a  prey  to  delusion.  The  general  interest  was  always 
sought  in  favoring  the  few  who  gained  by  high  prices 
rather  than  the  many  who  saved  by  low  prices — thus  pro- 
moting scarcity  and  fighting  off  abundance — or,  better  to 
show  the  delusion,  in  favoring  on  general  principles  those 
able  to  make  out  a  strong  case  for  governmental  favor, 
not  stopping  to  consider  at  whose  expense,  or  even  deny 


388         ECONOMIC  AND   INDUSTRIAL    DELUSIONS. 

ing  that  it  fell  on  anybody, — the  belief  being  that  what 
was  gained  by  the  beneficiaries  was  either  freely  bestowed 
by  a  benignant  Providence  or  was  wrested  from  the 
hated  foreigner.  This  delusion  well  served  the  purpose 
of  the  silver  men.  What  they  wanted  was  such  legislation 
as  would  insure  them  higher  profits  on  their  product ; 
exactly  what  all  the  protection-seekers  have  always 
wanted,  since  protection  was  first  contrived  for  them. 
Like  the  creators  of  protection,  they  did  not  wish  the 
cost  of  their  increased  profits  to  fall  on  their  fellow-coun- 
trymen ;  or,  if  that  must  needs  be,  they  did  not  wish  their 
fellow-countrymen  to  feel  it  so ;  and  this  kindly  supersti- 
tion was  exactly  fitted  to  bring  their  plans  to  success.  It 
has  helped  them  more  than  once,  and  it  helps  them  yet. 
It  at  this  moment  puts  these  men  in  the  attitude  of  pen- 
sioners of  the  Republic,  spreads  far  and  wide  the  impres- 
sion that  we  owe  them  something  because  we  have  given 
them  so  much  already,  and  takes  no  account  of  the 
people's  rights  on  the  other  side.  Are  not  we  after  all 
the  sufTerers  most  worthy  of  consideration  ?  Against 
those  "  vested  rights "  which  are  really  vested  wrongs, 
whoever  profits  by  them,  I  feel  like  repeating  the  reply  of 
the  Abolitionists  to  the  proposal  to  "  pay  ransom  to  the 
owner  " : 

"  Who  is  owner  ?     The  Slave  is  owner, 
And  always  was.     Pay  him." 

Their  scanty  numbers,  and  the  greater  prominence  of 
other  issues  in  our  politics,  have  been  difificulties  but  not 
discouragements  to  the  silver  representatives.  A  little 
strategy  has  been  necessary — nothing  more.  Strong  and 
undoubted  as  are  their  "  claims  "  to  protection — being 
few,  already  rich,  and  tightly  combined — they  might  yet 
have  failed   in   securing  the  aid  of  other  Protectionists, 


THE    SILVER    QURSTTON.  389 

notwithstanding  their  unfaiHng  co-operation  in  all  plans 
for  pillaging  the  multitude  to  benefit  a  few  favorites, 
had  they  not  secured  outside  support.  The  inflationists 
and  debtor-party  have  become  as  necessary  as  themselves 
to  the  success  of  the  movement  under  their  direction  ; 
although,  they  having  an  intelligent  understanding  of  it 
which  their  allies  lacked,  they  are  the  only  ones  to  get 
any  profit  from  it. 

The  arguments  used  to  confirm  and  sustain  this  alliance 
are  of  a  "spider  and  fly"  nature;  any  sober  appeal  to 
reason  would  be  thrown  away  on  persons  who,  it  seems, 
have  yet  to  learn  that  no  measure  for  making  a  so-called 
dollar  easier  to  get,  is  ever  going  to  make  the  goods,  for 
obtaining  which  the  dollar  has  all  its  value,  a  bit  easier  to 
get. 

Like  other  Protectionists,  the  silver  men  make  out  the 
principal  part  of  their  case  by  skipping  over  pertinent 
facts,  and  laying  stress  on  irrelevancies.  Shall  a  few  be 
mentioned  ?  The  silver  dollar  is  "  the  poor  man's  dollar" 
— certainly  ;  when  one  remembers  that  the  worst  dollar  is 
always  given  to  the  poor  man,  the  truth  of  this  claim 
is  seen  to  be  no  recommendation  of  it.  It  was  "  the 
original  dollar  " — that  is  to  say,  the  dollar  was  at  first  a 
silver  coin.  That  it  was,  and  so,  it  might  be  added,  did 
the  words  "  car  "  and  "  train,"  and  many  others,  have 
very  different  meanings  in  ruder  states  of  society,  from 
those  given  them  in  more  advanced  states.  It  is  no 
reflection  on  our  forefathers  that  we  do  not  recognize  the 
same  monetary  unit.  We  cannot  ;  the  work  expected  of 
money  in  our  day  is  different  altogether.  Just  as  we 
abandoned  trains  of  wagons  and  cars  pulled  by  beasts  for 
something  that  better  suited  our  growing  needs,  so  we 
have,  in  these  days  of  far  transportation  and  economy  of 
labor,  abandoned  the  silver  dollar  for  a  more  concentrated 


390        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

expression  of  value.  It  was  not  done  by  the  purpose  or 
wit  of  man,  but  by  the  movement  of  the  age. 

But  their  favorite  cry  is  one  that  has  the  high  advantage 
of  greater  vagueness  ;  they  want  to  put  silver  and  gold 
"on  an  equality"  in  coinage.  This  is,  when  considered, 
only  a  finer  way  of  saying  that  they  want  to  force  ever)' 
man  who  has  any  claim  on  one  of  these  metals  to  satisfy 
himself  with  sixteen  times  its  weight  in  the  other — nothing 
less  or  more.  In  every  other  way  the  "  equality"  is  as 
perfect  at  present  as  could  be  desired.  A  contract  to 
deliver  so  many  ounces  of  standard  silver — whatever  the 
number — would  be  recognized  and  enforced,  under  present 
laws,  and  the  government's  stamp  would  be  accepted  as 
evidence  of  weight  and  fineness,  precisely  as  if  the  contract 
called  for  gold.  And  this  is  what  a  money  contract  essen- 
tially is.  It  is  not  pretended  that  gold  has  any  other  than 
a  "  commodity  "  value — exactly  what  the  same  metal  has 
when  applied  to  other  uses — except  so  far  as  the  supply 
for  the  other  uses  is  reduced  by  the  withdrawal  of  so 
much  in  the  form  of  coins ;  or  that  its  withdrawal  affects 
its  value  in  any  other  way  than  it  would  be  affected  by 
the  introduction  of  some  new  use  for  gold — a  form  of 
fashionable  jewelry,  for  instance — which  called  for  the 
same  amount  of  it. 

The  fact  is,  what  the  silver-protectionists  are  after  is 
something  altogether  different  from  equality.  They  wish 
to  stamp  npon  their  metal  a  value  not  given  it  by  demand 
and  supply,  which  determine  all  other  values,  that  of  gold 
not  excepted.  Though  they  do  not  claim  the  power  to 
sell  an  ounce  of  silver  for  a  legally  determined  amount  of 
wheat  or  cloth,  they  do  claim  to  say  how  much  gold  it 
shall  sell  for — the  relation  in  value  of  gold  to  wheat  and 
cloth  being  determined  exactly  as  are  the  relations  of 
wheat  and  cloth  to  each  other.    They  are  not  content  with 


THE    SILVER    QUESTION.  39 1 

a  gold  status  for  silver,  but  would  raise  their  product  to 
an  eminence  that  no  other  product  occupies.  That  the 
sole  possible  means  of  accomplishing  such  a  result,  a  fund 
in  our  Treasury  for  unlimited  purchases  of  silver,  will 
never  be  allowed  them,  we  may  look  upon  as  quite  certain. 
The  uncertainty  is,  what  is  to  happen  to  our  Treasury  and 
our  general  business  while  we  are  making  our  effort  to 
achieve  their  end  for  them  without  the  necessary  means  ? 

FREE-COINAGE    PROBABILITIES. 

"  Don't  ever  prophesy  unless  you  know  "  is  a  favorite 
motto,  and  the  uncertainty  of  prediction  has  received 
many  a  practical  illustration  in  political  history — particu- 
larly in  that  of  our  silver  question.  Not  from  any  taste 
for  the  ofTfice  of  oracle  do  I  undertake  to  forecast  the 
probable  results  of  free  coinage,  but  only  because  I  find  it 
indispensable  to  a  full  discussion  of  the  project  ;  there 
must  be  a  clear  idea  of  all  its  possibilities,  and  a  careful 
estimate  of  the  degree  of  probability  belonging  to  each, 
before  one  can  rightly  judge  it.  On  such  an  idea  and  such 
an  estimate  is  every  project  adopted  or  rejected. 

The  ends  desired  by  the  two  interests  which  are  calling 
on  us  for  free  coinage  of  silver  cannot,  it  is  easily  seen, 
both  be  fully  realized.  He  who  has  a  debt  to  pay  wants 
the  dollar  that  will  cost  him  least,  in  labor  or  in  goods — 
the  dollar  whose  real  value  will  be  farthest  below  its  face  ; 
he  hopes  that  the  silver  which  is  to  compose  the  new 
standard  will  not  increase  in  value,  and  therefore  in  cost 
to  him.  He  who  has  silver  to  sell  wants  the  dollar  that 
will  buy  him  most — the  dollar  whose  real  value  will  be 
equal  to  its  face ;  he  hopes  that  the  value  of  silver  will 
increase  with  its  adoption  as  the  standard,  even  to  the 
point,  $1,293  per  ounce  Troy,  at  which  the  value  of  15.988 
parts  of  silver  equals  one  of  gold.     Free  coinage  cannot 


39-'      l':co^w^nc  and  industrial  delusions. 

completely  satisfy  both  sets  of  clamorers  ;  which  set  is 
then  to  be  satisfied  and  which  disappointed  ?  The  result 
may  be  something  between  the  two  desires;  some  rise  in 
value  which  will  bring  additional  gain  to  the  mining 
interests,  yet  not  suflficient  rise  to  disappoint  the  debtor 
of  his  longing  to  pay  his  debt  with  a  less  value  than  he 
contracted  to  pay.  Each  party  to  the  conspiracy  would 
thus  win  something  ;  but  the  miner  would  continue  to 
gain  as  long  as  his  metal  continued  to  bring  higher  prices, 
while  his  partner  could  never  gain  a  penny  after  his 
immediate  debt  was  discharged.  He  would  suffer,  on  the 
contrary,  in  two  ways:  he  would  have  to  procure  his 
future  loans  on  less  favorable  terms,  and  the  premium 
thus  temporarily  set  on  borrowing — the  sudden  ease  with 
which  his  nominal  dollar  was  made — would  confirm  him 
in  unthrifty  habits.  More  debts  would  thus  be  incurred, 
at  the  very  time  that  their  payment  was  made  more 
difficult. 

The  first  effect  of  a  free-coinage  act  would  be  to  bestow 
large  profits  on  all  who  have  silver  to  sell.  By  the  bill 
which  a  few  months  ago  passed  the  Senate  they  would 
have  been  assured  against  any  delay  in  realizing  those 
profits,  being  allowed  immediate  payment  for  silver  bul- 
lion in  fresh  issues  of  Treasury  notes ;  the  mint  might 
then  work  slowly  or  swiftly — their  gain  will  be  equally 
secure.  For  some  time  this  would  be  tantamount  to 
making  them  a  present  of  the  difference  between  the 
market  value  of  silver  (now  less  than  $i.oo)  and  the  par 
value  of  $1,293  per  ounce;  and  this  would  continue  as 
long  as  the  silver  dollars  and  the  notes  payable  therein 
could  be  made  to  do  the  work  now  done  by  dollars  based 
on  gold.  That  work  could  be  done  permanently  in  the 
discharge  of  debts  ;  for  a  long  time  in  payment  of  wages 
to  the  laborer,  because  it  would  take  him  many  months  of 


THE   SILVER    QUESTION:  395 

high  prices  and  hard  times  to  learn  that  his  dollar  meant 
something  different  from  what  it  used  to  mean  ;  for  a  con- 
siderable but  shorter  time  in  settling  accounts  with  the 
farmer,  who  would  be  a  little  less  slow  to  make  the  same 
discovery  ;  for  less  and  less  time  in  other  kinds  of  busi- 
ness, according  to  varying  intelligence  and  ability  to 
combine.  It  is  to  this  first  effect  that  the  silver  men  seem 
to  be  mainly  looking. 

A  second  effect  would  not  wait  long  upon  the  first. 
Our  mints  would  be  suddenly  choked  with  silver  bullion 
and  foreign  silver  awaiting  recoinage ;  and  the  public 
resources  would  be  strained  by  the  difficulty  of  disposing 
of  so  vast  a  mass  of  metal.  That  some  tendency  of  this 
kind  would  exist,  it  requires  little  more  than  plain  com- 
mon-sense to  see  ;  for  it  is  quite  evident  that  the  amount 
of  silver  now  for  sale,  here  or  abroad,  at  the  rate  of  one 
twentieth  or  less,  must  be  very  much  increased  when  a 
buyer  willing  and  able  to  pay  one  sixteenth  enters  the 
market.  Production  would  be  stimulated,  and  the  market 
would  be  flooded.  It  is  often  denied  that  European  gov- 
ernments would  be  disposed  to  sell  us  their  silver  coins 
at  one  sixteenth  of  gold  when  they  pass  such  coins  off 
at  home  for  a  higher  price  :  one  to  fifteen  and  a  half.  I 
should  not  dare  to  trust  them,  knowing  that  the  only  way 
in  which  they  are  able  to  make  silver  coins  pass  at  the  1 5^ 
rate  is  by  suspending  the  coinage,  and  jealously  hoarding 
up  all  silver  beyond  the  limited  amount  that  the  people 
must  have  for  small  change.  Those  governments  could 
not  keep  their  gold  in  the  country  if  they  were  willing  to 
let  out  their  whole  stock  of  silver  coins  at  i  to  I5|- ;  they 
would  be  glad  indeed  to  save  themselves  an  embarrass- 
ment by  throwing  it  on  us,  and  to  sell  us  many  millions' 
worth  of  silver  on  terms  so  favorable.  The  position  of  the 
governments  that  hold  a  surplus  of  silver  is  not  unlike 


394        ECONOMIC  A.V/)    /.Y/)irS7'A'/AL    DF.rJISWNS. 

that  of  the  capitalist  who  has  power  to  pass  every  sheet 
of  paper  in  his  desk  at  many  thousand  times  its  value,  by 
writing  a  few  words  on  it ;  who  is  nevertheless  glad  to 
sell  that  paper,  blank,  at  the  smallest  advance  on  its  cost 
price.  He  can  easily  replace  the  paper  he  sells,  and  so 
can  they  replace  their  silver,  I  admit,  however,  that  this 
state  of  things  could  not  long  continue  unchanged.  As 
the  second  effect  grew  out  of  the  first,  it  would  lead  to 
and  be  checked  by  the  one  next  in  order. 

The  third  effect  would  be  to  depreciate  the  purchasing 
power  of  the  dollar  in  about  the  ratio  that  the  value  of  a 
silver  ounce  now  holds  to  $1,293,  making  it  worth  less 
than  are  eighty  cents  at  present.  This  change  would 
be  known  as  an  increase  in  prices.  Though  all  prices 
must  sooner  or  later  be  raised,  to  correspond  with  the 
depreciated  unit  of  value,  I  have  shown  that  the  move- 
ment would  not  be  simultaneous  ;  it  would  start  among 
the  wealthy  and  educated  dealers  who  have  power  and 
experience  in  concerted  action,  and  would  last  reach  the 
poor,  uncontriving,  and  uninstructed  day-laborer.  When 
the  artisan  at  the  manufacturing  centre,  the  farmer,  and 
finally  the  toiler  in  his  fields,  became  at  last  able  to  make 
good  their  claim  to  an  equal  nominal  increase  or  real  res- 
titution in  the  sums  paid  to  them,  the  adjustment  would 
be  complete.  Silver,  by  that  time  the  unit  of  value, 
would  have  little  or  no  more  than  its  present  purchasing 
power,  and  the  mine  owner  could  realize  from  the  necessity 
or  credulity  of  his  fellow-citizens  little  or  no  more  than  his 
present  gains.  His  great  season  of  prosperity  would  be 
meanwhile,  before  the  adjustment  could  be  completed  ; 
and  would  be  paid  for,  as  I  have  plainly  pointed  out, 
chiefly  by  the  "  unlettered  hind  "  and  manual  laborer. 

In  explanation  of  my  confidence  that  unlimited  coin- 
age of  silver  would  give  it  no  appreciable  permanent  in- 


THE    SILVER   QUESTION'.  395 

crease  of  purchasing  power,  measured  either  by  gold  or 
by  other  commodities,  I  may  refer  to  the  table  given  in  a 
preceding  paper,  where  our  sixty  years  of  attempted  bi- 
metallism, 1793-1853,  were  divided  in  six  periods,  to  show 
the  progressive  practical  demonetization  of  one  metal  in 
which  such  attempts  must  result.  Our  legal  coinage  ratio 
was  entirely  without  influence  on  the  commercial  ratio 
between  the  two  metals,  for  the  latter  rose  through  the 
mean  values  15.53,  15.58,  15.80,  during  the  three  periods 
while  we  were  trying  to  keep  it  at  15,  and  fluctuated 
through  15.75,  15.86,  and  15.58  during  the  three  while  our 
laws  would  have  made  it  15.99.  These  figures  show 
nothing  of  that  effect  of  bringing  the  commercial  ratio  up 
or  down  to  the  legal,  on  the  pretence  of  which  the  claim 
of  the  free-coinage  advocates  to  the  name  of  "  bi-metallist  " 
is  essentially  based ;  and  there  is  thus  nothing  in  our 
experience  to  suggest  a  conclusion  different  from  the 
one  I  have  drawn,  that  any  present  change  in  our  standard 
of  values  must  be  quite  without  effect  on  the  price  of 
gold  as  compared  with  silver.  The  coincidence  of  the 
Mint  Act  of  1873,  which  cut  off  the  unlimited  legal-tender 
feature  from  a  dollar  coined  always  in  very  small  quanti- 
ties and  at  that  time  exported  as  fast  as  coined,  with  a 
fall  in  the  gold  price  of  silver,  is  about  the  only  fact  that 
might  suggest  a  different  conclusion ;  but  that  has  been 
already  sufificiently  explained. 

The  next  effect  would  inevitably  be  the  complete  dis- 
appearance of  gold  from  the  circulation.  Gold  is  never  to 
be  had  when  inferior  money  will  go  just  as  far;  whether 
the  substitute  be  dubious  paper  or  overvalued  metal.  Its 
disappearance  under  our  unlimited  coinage  of  silver  at 
one  fifteenth  before  1834  has  already  been  remarked.  The 
tables  of  the  Mint  Reports  do  but  scanty  justice  to  the 
effect   as  felt  outside,  however,  for  we   are   told   that  as 


396        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

early  as  "in  1822  not  a  single  American  gold  coin  was  in 
circulation  in  the  United  States,  though  $6,000,000  had 
been  coined  at  the  mint." 

As  to  another  effect,  unfortunately  only  too  possible, 
that  of  a  severe  financial  crisis  to  follow  such  a  tampering 
with  credit,  it  is  worth  while  to  quote  from  a  striking 
article  on  "  The  American  Silver  Bubble,"  by  the  distin- 
guished English  economist,  Mr.  Robert  Giffen.  A  clearer 
view  of  affairs  in  any  country  is  often  to  be  had  from  out- 
side the  country,  just  as  the  movements  of  an  army  are 
better  understood  by  those  who  have  the  advantage  of 
distance  and  are  not  moving  with  it  ;  and  Mr.  Giffen's 
position  at  home  is  such  that  the  views  he  takes  of  our 
situation  are  probably  those  which  will  be  generally  taken 
at  the  world's  greatest  business  centre. 

The  writer  cites  a  remark  of  the  late  Mr.  Bagehot,  that 
our  country  is  the  theatre  where  the  result  of  economic 
experiments,  or  rather  illustrations  of  the  truth  of  elemen- 
tary economic  principles,  can  best  be  studied  on  a  large 
scale  ;  and  he  finds  a  verification  of  it  in  the  case  of  our 
recent  financial  legislation.  He  then  describes  our  half- 
dozen  kinds  of  "  substitutionary  or  representative  "  cur- 
rency, since  we  first  fancied  that  we  gave  up  trying  **  to 
have  a  complete  monometallic  system  ";  for  in  his  view, 
"  although  this  intention  has  been  partially  nullified  by 
legislation  of  a  different  kind  in  1878,  on  resuming  specie 
payment,  and  since,  at  the  instigation  of  the  abundant 
money  party,  yet  gold  in  fact  retains  its  pre-eminence  in 
the  United  States  system."  This  conclusion,  that  gold  is 
still  our  standard,  and  our  only  standard,  and  that  it  can 
only  cease  to  be  such  by  ceasing  altogether  to  be  money, 
has  already  been  made  sufficiently  familiar  to  readers 
of  these  pages.  Our  six  kinds  of  substitute  currency  all 
depend  for  their  value  on  the  gold  dollar  of  25.8  grains 


THE  s;tlvf.k  qvkstio.w  397 

and  the  credit  of  the  government.  The  difference  among 
them  is  in  the  kind  of  security  given  for  the  perform- 
ance of  an  identical  promise  to  pay  a  gold  dollar  ;  the 
greenback,  for  instance,  has  behind  it  a  special  deposit  of 
$100,000,000  in  specie  to  meet  all  demands  ;  the  gold  cer- 
tificate a  deposit  of  the  total  amount  outstanding;  the 
silver  dollar  (in  addition  to  its  intrinsic  value)  the  force  of 
laws  which  make  it  receivable  at  par  with  gold  for  all 
dues  to  the  government,  etc.  But  is  not  the  dependence 
of  the  holder,  in  every  one  of  these  cases,  simply  on  the 
good  faith  of  the  national  government?  By  recourse  to 
so  various  and  involved  ways  of  enlisting  and  securing 
that  good  faith,  do  we  pledge  it  more  firmly  in  any  case? 
No  wonder  our  contrivance  of  half  a  dozen  devices  for 
expressing  precisely  the  same  thing  is  characterized  as 
"wastefulness  "  and  perverted  ingenuity. 

It  would  be  interesting  to  quote  from  Mr.  Giffen  at 
greater  length,  but  there  is  only  room  for  a  few  extracts 
in  which  he  shows  the  want  of  confidence  in  the  solidity 
of  our  financial  structure,  with  which  our  silver  vagaries 
are  now  inspiring  the  cautious  Briton  : 

*'  By  departing  from  the  simplicity  and  perfection  of  a  single 
standard  in  the  vain  hope  of  increasing  '  money,'  as  it  is  thought, 
and  so  raising  prices,  which  they  think  can  be  done  by  making 
gold  and  silver  standard — a  thing  that  is  impossible — or  by 
multiplying  representative  and  small-change  currency  only, 
which  has  little  or  no  effect  on  prices,  the  people  of  the  United 
States  are  running  the  most  serious  risks  of  financial  disaster. 
The  moment  the  present  expedients  to  keep  all  the  substitu- 
tionary currency  on  a  level  with  gold  cease  to  be  effective,  and 
this  currency  is  pressed  upon  the  market  in  excess,  gold  will 
cease  to  be  standard  ;  the  gold  in  the  United  States  will  be 
either  hoarded  or  exported,  or  used  at  a  premium  ;  and  silver 
will  fast  become  the  standard  money.  Existing  creditors  will 
receive  in  consequence  less  than  they  contracted  for  ;  many 
contracts  will  be  disturbed  ;  and  in  circumstances  easily  con- 
ceivable there  will  certainly  be   panic.     .     .     .     The  return 


39<^         KCONOMTC  AN'D   INDUS7^RT.\ I.    /)/-:r.L'SmA'S. 

to  specie  j)ayments  in  this  country  after  the  inconvertible 
paper  at  the  beginning  of  the  century  was  a  most  painful 
process,  and  the  great  panic  of  1825  incidentally  arose  out  of 
it.  .  .  .  To  this  sort  of  evil  the  United  States,  having 
got  a  good  standard,  voluntarily  exposes  itself  in  deference  to 
the  fanatics  of  bi-metallism,  stimulated  by  the  private  interests 
of  mine  owners  who  have  silver  to  sell.  .  .  .  The  crisis 
may  possibly  come  before  long.  It  is  only  a  question  of  a 
short  time  when  the  United  States  will  be  face  to  face  once 
more  with  the  problem  of  surplus  silver.  .  ,  .  Another  fact 
which  points  in  the  direction  of  an  early  crisis  is  the  pros- 
pect of  a  diminution  of  the  annual  surplus  of  revenue  over 
expenditure,  which  has  hitherto  enabled  the  United  States 
Government  to  act  so  powerfully  on  the  money  market.  .  .  . 
It  is  evident  then,  that  the  situation  in  the  United  States  under 
the  new  regime  must  be  extremely  complex  and  difficult. " 

Commercial  crises  do  not  come  so  often  as  they  are 
predicted  ;  and  it  is  rare  that  they  come  in  the  manner 
expected,  for  their  very  prediction  tends  to  ward  them 
off.  Secretary  McCulloch  began  to  prepare  the  country 
for  a  panic  as  soon  as  the  Civil  War  closed,  and  was  look- 
ing out  for  it  as  long  as  he  continued  at  the  head  of  the 
Treasury  ;  and  yet  he  ingenuously  confesses  that  when  it 
did  arrive  in  1873  ^^  surprised  him  as  much  as  any  one. 
It  is  altogether  possible,  therefore,  that  even  though  gold 
payments  should  be  suspended  in  this  country,  in  conse- 
quence of  the  clamor  of  shortsighted  men  for  a  "  re- 
adjustment "  of  their  debts  and  their  impending  realization 
that  they  can  obtain  no  such  readjustment  as  long  as  gold 
is  accepted  as  a  standard  of  value,  tliere  might  be  no  such 
period  of  general  distress  as  we  had  in  1857  or  1873.  But 
none  the  less  is  it  madness  to  incur  the  risk ;  madness  to 
neglect  the  lessons  which  experience,  both  in  our  own  and 
in  other  countries,  has  for  us.  We  should  not  so  often 
have  to  serve  as  a  theatre  for  the  illustration  of  economic 
truth  to  other  lands,  if  we  paid  closer  attention  to  the 
exhibitions  that  they  have  made  for  our  benefit,  or  better 


THE    SiTLVER    QUESTION.  399 

remembered  the  truths  that  we  ourselves  have  exemplified 
in  the  past. 

I 

SILVER    AND    DEMOCRACY. 

This  discussion  has  reached  a  greater  length  than  was 
at  first  intended  for  it,  but  none  can  claim  that  its  subject 
is  lacking  in  importance  or  in  timeliness.  Few  questions 
are  more  constantly  arising  in  our  national  legislation, 
few  receive  more  attention  from  public  men,  and  yet  few 
more  obstinately  elude  a  satisfactory  settlement,  than 
that  of  the  silver  dollar.  The  Coinage  Act  of  1878,  as  we 
have  seen,  satisfied  nobody,  and  yet  no  change  in  it  was 
possible  for  twelve  years  because  no  acceptable  substitute 
was  proposed ;  amid  universal  agreement  that  the  act 
needed  amendment,  there  was  no  agreement  what  amend- 
ment it  needed.  The  measure  which,  through  many 
vicissitudes,  pushed  its  way  to  enactment  in  July,  1890,  is 
destined  to  be  little  more  fortunate.  Notwithstanding 
the  complacency  with  which  the  Republican  press  affects 
to  regard  it,  the  party  is  plainly  at  odds  on  the  subject ; 
while  disapprobation  among  the  Democrats  is  universal. 
Manifestly,  then,  the  silver  question  is  yet  before  the 
country  for  settlement.  When  the  Democratic  party 
comes  into  its  own  again,  it  ought  to  hold  clear  views 
upon  this  question,  and  have  the  power  as  well  as  the  will 
to  turn  them  to  good  purpose. 

What  attitude,  with  regard  to  the  coinage,  ought  to  be 
taken  by  the  Democrats?  What  attitude  is  most  truly 
Democratic?  There  should  be  no  hesitancy  in  replying  : 
the  one  which  involves  least  interference  by  the  govern- 
ment and  the  widest  liberty  of  the  citizen.  It  is  the  duty 
of  the  government  to  enforce  contracts,  and  this  obliga- 
tion extends  no  further  than  to  see  that  whenever  a 
"  dollar  "  is  promised,  the  same  value  shall  be  paid— un- 


400         ECONOMIC  AND   IMDrsTRIAI.    DE/jrsiONS. 

less  public  interests  require  otherwise.  The  powers  of 
the  government  in  coining  money  are  granted  it  for  the 
purpose  of  facilitating  the  fulfilment  of  such  contracts 
and  for  no  other  purpose.  The  party  now  dominant  has 
gravely  declared  it  "  the  policy  of  the  United  States  to 
maintain  a  parity  between  gold  and  silver  on  the  present 
legal  ratio,"  and  certainly  the  government  has  been  called 
upon  to  make  some  powerful  efforts  toward  that  end ; 
but  its  power  over  values  has  never  gone  beyond  its  own 
coinage — uncoined  silver,  in  contempt  of  governmental 
acts  and  policies,  regulating  its  price  strictly  according  to 
supply  and  demand.  Apart  from  its  proved  futility,  this 
policy  is  fundamentally  unsound  according  to  the  Demo- 
cratic view.  Whatever  a  paternal  government  may  take 
upon  itself  to  maintain,  no  truly  sound  or  free  government 
will  assume  to  declare  that  so  much  of  one  valuable  shall 
be  exchanged  for  so  much  of  another.  The  whole  con- 
trivance of  sumptuary  laws,  along  with  which  regulations 
of  that  kind  must  be  classed,  is  discredited  in  our  country ; 
not  only  because  it  is  an  infringement  of  liberty,  but  be- 
cause the  folly  of  it  has  been  proved  by  experience  here 
and  in  other  lands. 

Is  it  not  in  strict  accordance  with  the  view  of  the  func- 
tions belonging  to  government  always  held  by  Democrats, 
to  look  on  any  attempt  to  fix  a  standard  of  values  as  alto- 
gether out  of  the  sphere  of  legislation?  The  fact  that  the 
country  acknowledges  the  gold  standard,  that  a  dollar 
really  means  some  definite  quantity  of  pure  gold,  but  no 
definite  quantity  of  any  other  substance,  is  not  due  to 
legislation.  Instead  of  the  supposed  tricks  of  a  "  demon- 
etizing "  act,  surreptitiously  passed  to  increase  the  ill- 
gotten  gains  of  rich  men,  the  matter  was  determined  by 
the  needs  of  our  commerce.  As  business  transactions 
multiplied,   and   larger  values  had  to  be  transported   in 


THE   S/LVr.R   QUESTIOJV.  4OI 

settling  accounts,  economy  in  the  transportation  had  to 
be  considered  ;  and  the  substance  which  gave  more  value 
in  the  same  bulk  and  weight  was  necessarily  preferred. 
Such  is  the  true  explanation  and  the  only  explanation  ; 
and  it  has  escaped  discovery  by  statesmen  intent  upon 
unravelling  some  deep-laid  plot  or  cunning  hocus-pocus, 
probably  because  of  its  very  simplicity.  The  reasons  for 
the  persuasion  that  this  is  a  gold-standard  country  in 
common  with  the  great  commercial  nations  generally,  and 
not  a  silver-standard  country  such  as  Mexico  or  China, 
need  not  again  be  detailed  ;  but  it  must  be  acknowledged 
that  they  owe  their  force  to  the  volume  of  our  commerce. 
Were  our  commercial  transactions  confined  within  Mexi- 
can or  Chinese  limits,  the  Mexican  or  Chinese  standard  of 
values  might  suffice  us.  Nor  is  this  decision  of  imperative 
business  interests  one  which  the  government  is  called  upon 
to  review  or  to  reverse. 

This  statement  of  Democratic  doctrine,  although  its 
strict  orthodoxy  admits  no  question  whatever,  is  un- 
acceptable to  many  faithful  Democrats.  There  are  those 
who  cherish  the  "  iridescent  dream  "  that  it  is  possible  to 
have  two  standards  at  the  same  time,  without  throwing 
upon  the  government  which  should  undertake  to  main- 
tain them  a  burden  of  expense  equal  to  that  of  prose- 
cuting a  mighty  war.  It  is  only  necessary  to  remember 
that  the  circulation  of  two  metals  in  unlimited  quantities, 
at  par  on  a  fixed  ratio,  is  something  that  has  never  actu- 
ally been  attained,  but  something  whose  successful  accom- 
plishment would  require  the  maintenance  in  the  Treasury 
of  a  sufficient  supply  of  one  metal  to  purchase  all  that 
could  be  brought  thither  of  the  other,  from  the  wide 
world — to  realize  that  the  endeavor  would  be  certain  to 
cost  far  more  than  it  was  worth.  Is  not  national  economy 
truest  Democrac\'? 


402         ECONOMIC  AMD   TNDifSTRIAL   DELUSIONS. 

There  are  others  who  contend  that  the  equal  recogni- 
tion by  our  laws  of  the  silver  dollar  and  gold  coins,  at 
the  suspension  of  specie  payments,  was  or  should  have 
been  of  itself  sufficient  to  put  the  two  on  the  same  foot- 
ing when  specie  was  reinstated  ;  so  that  the  debtor  be- 
came entitled  to  an  option,  in  which  coin  he  should  pay. 
It  is  unquestionable  that  most  of  the  Democratic  support 
for  schemes  of  free-silver  coinage  is  obtained  on  some 
such  statement  of  the  case  as  this.  Yet  the  answer  is 
an  easy  one.  No  advantage  can  possibly  come  from  pay- 
ing one's  debts  in  silver,  so  long  as  the  only  silver  money 
to  be  had  represents  gold  value.  If  the  value  of  the 
silver  dollar  is  going  to  depend  entirely  on  that  of  gold, 
that  of  the  metal  it  contains  not  entering  into  the  cal- 
culation, there  is  plainly  no  use  in  having  a  silver  dollar 
at  all,  and  we  should  represent  the  gold  dollar  in  more 
convenient  shape.  If,  on  the  other  hand,  we  give  the 
debtor  the  advantage  of  paying  only  the  face  value  of 
the  silver  dollar,  the  gold  dollar  ceases  to  be  currency ; 
for  no  possessor  of  such  a  dollar  will  put  it  to  a  use  in 
which  it  brings  him  less  than  its  value. 

The  result  toward  which  those  who  would  provide  an 
easier  way  of  paying  debts  are  really  looking,  therefore, 
is  the  single  silver  standard.  The  question  is  before  us, 
not  to  be  disguised  or  evaded  ;  shall  our  standard  of 
values  be  gold  or  silver  ?  On  this  question,  if  our  Demo- 
cratic advocates  of  free  coinage  could  see  that  it  and 
no  other  was  really  involved,  there  could  be  no  reasonable 
doubt  of  the  position  of  the  party.  Whatever  leanings 
Democrats  may  have  shown  toward  that  impartial  treat- 
ment of  the  two  metals  whose  possibility  is  found  rather 
in  the  realm  of  fancy  than  in  that  of  actuality,  none  has 
maintained  that  silver  is  a  better  standard  than  gold, 
when  the  two  are  incompatible. 


THE   SILVER   QUESTJO.V.  403 

Another  reason,  it  must  be  truthfully  confessed,  why 
many  good  and  able  men  have  suffered  themselves  to  be 
misled  on  the  silver  question,  is  the  shrewdness  with 
which  the  mining  interest  has  always  played  its  part  in 
the  national  legislature.  By  pretending  in  the  first  place, 
to  a  consuming  zeal  for  free  coinage  of  the  white  metal, 
it  manages  to  enlist  for  a  movement  to  that  end  a  large 
Democratic  as  well  as  Republican  support.  Here  falls 
the  curtain  on  the  first  act  of  its  little  play — so  success- 
fully performed  in  1878  as  to  encourage  a  repetition 
on  a  grander  scale  after  a  twelve  years'  interlude.  The 
second  act  discloses  some  very  interesting  consternation 
among  the  more  conservative  heads  in  Congress,  over  the 
danger  threatening  the  coinage  system,  and  a  decision  to 
avert  that  danger  by  a  "  liberal  concession  to  silver."  In 
the  final  act  the  mining  interests  are  granted  their  heart's 
desire,  a  law  by  which  the  government  is  forced  to  con- 
tribute to  their  gains  by  a  compulsory  purchase  of  a 
large  part  of  their  product  ;  all  the  actors  retire  in  high 
satisfaction,  and  nobody  suffers  except  the  swindled  pub- 
lic, at  whose  cost  the  schemers  are  rewarded.  The  pretty 
feature  about  the  play  is  that  nobody  seems  to  suspect, 
when  the  star  performers  come  so  ardently  and  emphati- 
cally to  the  front  with  their  demand  for  free  coinage, 
what  they  are  actually  after  ;  that  is  left  to  appear  in  the 
denouement. 

Will  the  Democrats  whose  unwitting  aid  has  more  than 
once  been  used  to  advance  the  plans  of  a  bold  and  con- 
scienceless silver  lobby,  ever  again  consent  to  serve  as 
cat's  paw?  I  see  their  eyes  opening;  I  trust  and  have 
faith  to  believe  that  they  have  appeared  in  that  role  for 
the  last  time.  Even  Mr.  Bland,  the  acknowleged  leader 
among  them,  confesses  to  a  disappointment  at  the  work- 
ing of  the   act  of  1878,  with  which — in   spite  of  the  fact 


404         ECO  ATOMIC  AND  INDUSTRIAL   DELUSIONS. 

that  it  was  essentially  the  work  of  the  Republican  Alli- 
son— he  is  generally  complimented  by  the  association  of 
his  name.  He  has  given  us  to  understand  that  were  it 
to  be  done  over,  he  would  not  again  become  responsible 
for  a  measure  from  which  the  mine-owners  alone  could 
draw  benefit ;  and  he  is  as  ready  as  any  one  to 
recognize  the  true  tendency  of  the  act  passed  by  the 
Republicans  last  July.  Can  he  not  take  one  short  step 
farther,  and  agree  that  it  is  forever  hopeless  for  the 
party  to  make  any  capital,  or  to  accomplish  any  useful 
work  by  trying  to  outbid  the  Republicans  for  the  support 
of  the  silver  mining  ring?  A  few  years  ago  there  were 
Democrats  who  still  clung  to  protection,  and  thought  it 
in  the  power  of  the  party  to  soften  the  opposition  of  its 
beneficiaries  by  dealing  gently  with  that  mighty  abuse. 
The  futility  of  such  counsels  has  been  amply  demon- 
strated ;  and  a  like  demonstration  awaits  any  Democratic 
courtship  of  the  beneficiaries  of  Congressional  silver 
deals.  They  know  too  well  that  between  their  interests 
and  our  principles  no  adjustment  is  possible.  Who  is 
blind  to  the  fact  that  there  are  no  firmer  Republicans 
than  they — none  more  ready  to  vote  for  all  the  schemes 
of  the  Protectionist,  for  every  device  that  will  build  up 
the  interests  of  a  few  capitalists  at  the  expense  of  the 
people  ?  Who  deludes  himself  with  the  fancy  that  the 
Republicans  knew  not  whom  they  were  receiving  when 
they  admitted  the  "  rotten-borough  "  States  ? 

The  owners  of  silver  mines  are  truly,  as  Mr.  Giffen 
recently  assured  us,  the  "  gainers  by  the  American  silver 
bubble.  They  are  even  better  off  than  if  they  had  got 
unlimited  coinage  of  silver,  which  was  so  very  near  being 
carried."  Will  all  good  Democrats  remember,  that  by 
any  possible  legislation  in  behalf  of  silver,  no  others  can 
be  permanent  gainers  ?     That  their  gains  must  be  paid 


THE   SILVER   QUESTION.  405 

by  our  losses,  the  heaviest  burdens  falling  on  the  weakest 
shoulders  ?  That  private  favoritism  and  Democratic 
doctrine  are  hopelessly  irreconcilable — forever  in  mortal 
conflict  ? 

DEVICES    FOR    INCREASING    THE    CIRCULATION    OF    SILVER. 

Associated  with  the  free-coinage  scheme  which  has 
SO  long  occupied  our  attention,  are  a  few  others  which 
deserve  notice.  These  have  in  view  the  same  end,  of 
bringing  more  of  our  large  annual  silver  production  into 
use  as  money,  but  undertake  to  attain  it  without  degrad- 
ing our  standard  of  values  and  driving  gold  to  a  premium. 
Two  of  these  have  already  been  carried  into  effect  by 
Republican  enactment  ;  one  of  them  by  Mr.  Allison's 
amendment  to  the  "  Bland  Bill  "  in  1878,  the  other  by 
the  caucus  bill  which  became  law  in  1890.  The  effects 
of  the  first  have  already  been  examined  ;  those  to  be  ex- 
pected from  the  second  may  be  readily  inferred  from  a 
brief  consideration  of  its  character.  It  increases  the  silver 
circulation  only  in  a  representative  form — coins  being  re- 
placed by  Treasury  notes.    It  has  three  conspicuous  traits : 

1.  Burdening  the  national  Treasury  with  the  care  of 
a  large  quantity  of  silver  bullion  for  which  it  can  find  no 
practical  use.  There  can  be  no  demand  for  the  metal  as 
coin,  so  long  as  none  of  the  coin  can  be  had  except  by 
giving  gold  value  for  it  ;  and  any  sale  of  it  by  the 
government  would  obviously  defeat  the  second  aim  of 
the  act. 

2.  Increasing  the  price  of  the  metal  and  the  profits  of 
those  who  own  silver  mines.  This  effect  naturally  follows 
the  creation  of  an  artificial  demand.  The  government 
has  entered  into  a  "  corner  "  in  which  it  throws  all  the 
risk  and  cost  on  the  taxpayers  who  supply  it  the  means, 
and  hands  over  to  the  mine-owners  all  the   profit.     That 

23 


406        ECONOMIC  AND  INDUSTRIAL  DELUSIONS. 

is  pleasant  for  the  mining  interest,  but  when  one  thinks 
of  the  higher  cost  set  by  legislation  upon  the  table-ware 
and  watch  cases,  and  other  articles  of  wide  but  less  uni- 
versal use,  little  that  is  better  than  vulgar  highway  rob- 
bery can  be  seen  in  it.  Beautifully  appropriate  it  is,  that 
the  entire  responsibility  for  the  passage  of  a  law  despoil- 
ing the  great  body  of  our  citizens  for  the  benefit  of  a 
favored  class  should  rest  on  the  Republican  party. 

3.  Inflating  the  currency,  by  an  addition  analogous  to 
the  French  assignats  of  a  century  ago  and  to  the  Argen- 
tine cedillas  of  our  own  day.  Although  without  the  most 
dangerous  features  of  those  experiments  in  finance — issue 
by  the  government  in  unlimited  quantities,  and  no  pro- 
vision for  redemption — the  new  Treasury  notes  are  a  step 
in  the  same  fatal  direction.  They  steadily  increase  by 
large  monthly  instalments,  so  that  their  accumulation  is 
certain  after  a  time  to  embarrass  our  Treasury,  which 
must  either  let  them  depreciate  to  a  silver  basis  and  carry 
down  with  them  its  whole  credit,  or  must  put  them  on  a 
gold  basis  at  some  such  cost  in  financial  stringency  as  was 
experienced  in  redeeming  our  greenbacks  after  the  close 
of  the  civil  war.  To  hand  down  to  another  generation, 
which  will  assuredly  have  burdens  enough  of  its  own  to 
bear,  the  obligations  incurred  by  the  present  generation, 
is  pardonable  when  the  national  safety  is  involved,  as  in 
the  civil  war,  but  is  a  cowardly  evasion  when  the  nation 
is  not  in  danger,  and  despicable  trickery  when  the  stress 
is  only  that  of  party  need.  Like  the  assignats  and  the 
cedulas,  the  new  notes  have  value  behind  them ;  unlike 
them,  they  are  not  issued  in  enormous  excess  of  that 
value ;  but  the  silver  bullion  on  which  they  are  issued 
cannot  be  used  in  any  way  for  redeeming  them  without 
sacrificing  the  main  purpose  of  the  act — to  increase  the 
price  of  silver  by  "  cornering  "  it. 


THE   SILVER    QUESTIOA'.  407 

So  much  for  the  devices  made  into  laws  by  Repubh- 
can  legislation.  Their  bad  character  can  hardly  be  in 
need  of  further  exposition.  Another  plan,  distinguished 
from  these  by  containing  no  scheme  for  the  gratuitous 
enrichment  of  any  "  industry,"  is  for  that  reason  less  at- 
tractive to  the  Republican  mind,  and  finds  its  chief  sup- 
port among  Democrats.  This  proposes  the  "full  weight 
dollar,"  a  dollar  to  be  coined  equally  with  gold  as  un- 
limited legal-tender,  just  as  in  the  other  silver  schemes, 
but  differing  essentially  from  other  proposed  dollars  in 
its  weight,  which  is  to  be  fixed  by  the  present  market 
price  of  silver  in  terms  of  gold  ;  now  about  one  to  twenty, 
instead  of  one  to  sixteen.  This  new  silver  dollar,  freely 
coined  for  unlimited  legal-tender  purposes,  would  there- 
fore weigh  not  far  from  500  grains,  in  place  of  the  412^ 
prescribed  by  Bland  and  Allison. 

There  would  be  many  points  of  interest  in  this  plan,  if 
it  were  a  practicable  one — if  there  were  a  real  prospect  of 
its  enactment.  First,  unless  the  act  carrying  it  into 
effect  bound  the  government,  or  made  it  the  duty  of 
some  strong  corporation,  to  maintain  the  decreed  ratio  of 
value  between  gold  and  silver,  the  plan  would  not  give  us 
two  standards,  however  it  might  appear  to  do  so  while 
the  price  of  silver  remained  unchanged  in  the  markets  of 
the  world.  As  soon  as  silver  became  dearer  or  cheaper, 
prices  would  base  themselves  on  gold  alone  or  silver 
alone,  and  the  standard  would  thus  remain  until  changing 
conditions  of  production  brought  another  overturn ;  we 
should  have  either  the  coinage  system  that  prevailed 
with  us  before  1834,  or  that  between  1834  and  1853 — "ot 
bi-metallism.  Second,  unless  the  price  of  silver  should 
rise,  so  as  to  assure  us  the  gold  standard,  our  unit  of 
values  would  be  fluctuating  and  unsteady — as  reckoned  in 
the  currency  of  the  nations  with  which  we  have  our  prin- 


40(S         ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

cipal  commercial  dealings.  It  is  worth  while  to  stop  and 
explain,  that  I  do  not  ascribe  to  gold  any  greater  in- 
herent, intrinsic  fixity  of  value  than  belongs  to  silver,  or 
to  any  other  commodity  ;  I  am  merely  calling  attention 
to  the  inconvenience  of  a  standard  of  values  that  holds  no 
steady  relation  to  that  recognized  in  the  countries  with 
which  we  trade.  Third,  the  fact  that  when  the  two 
metals  pull  apart,  as  they  inevitably  must,  the  currency  of 
the  country  will  be  brought  down  to  one  of  them  alone, 
is  sufficient  to  assure  us  that  this  device  could  not  bring 
about  the  desired  increase  in  the  circulating  medium. 
Just  as  the  fullest  employment  of  labor  is  provided  by  its 
division  among  difTerent  pursuits,  as  all  experience  has 
proved,  so  it  has  equally  proved  that  the  fullest  use  of 
gold  and  silver  as  money  is  provided  by  giving  them 
different  parts  to  perform — one  as  full  legal-tender,  the 
other  as  subsidiary.  I  can  freely  admit  that  the  "  full- 
weight-dollar "  project  is  altogether  free  from  the  graver 
objections  made  against  such  free-silver  bills  as  those  that 
have  lately  passed  the  Senate,  for  there  would  be  nothing 
dishonorable  in  paying  public  and  private  debts  with  the 
proposed  dollars ;  and  yet  I  am  unable  to  commend  the 
project  as  prudent  or  appropriate.  The  objections  to  it 
are  those  which  must  attend  every  possible  plan  for 
making  silver  full  legal-tender  in  this  country,  except  by 
concert  with  other  commercial  nations. 

But  in  admitting  that  the  free  coinage  of  a  dollar  whose 
real  value  is  equal  to  its  professed  value  would  swindle  no 
one,  and  would  pay  no  one  a  bounty  at  the  public  cost,  I 
have  stated  precisely  the  thing  that  will  prove  fatal  to 
the  whole  plan.  To  the  silver  man,  those  two  objects 
are  vital.  Were  it  out  of  his  power  to  attain  them, 
the  restoration  of  silver  to  supremacy  in  our  coinage,  for 
which  he  now  so  earnestly  appeals  to  us,  would  become 


THE   SILVER   QUE  ST/0  A'.  4O9 

to  him  a  matter  of  indifference.  "  Free  coinage  "  must  do 
those  two  things,  or  it  will  not  be  advocated.  The  play 
would  be  "  Hamlet  without  the  title-role,"  and  would  be 
taken  off  the  boards  after  the  first  night. 

One  more  plan  remains  for  examination.  Since  the 
*'  natural  right "  of  the  citizen  to  the  good  oflfices  of  his 
government  in  assaying  and  weighing  out  pieces  of  metal, 
and  stamping  them  with  some  name  indicating  value,  is 
the  same  in  the  case  of  silver — or  of  copper  or  pewter  or 
aluminum,  it  might  be  added  —  as  in  that  of  gold,  the 
question  has  sometimes  been  suggested  :  Why  not  grant 
free  and  unlimited  coinage  of  silver,  as  desired  by  pro- 
ducers of  that  metal,  with  the  simple  proviso  that  the 
new  coins  shall  be  legal  tender  only  where  they  have  been 
mentioned  in  the  contract,  and  shall  not  be  used  to  im- 
pair the  obligation  of  existing  contracts  ?  We  could 
have  "  dollars  "  denoting  different  values,  applicable  to 
different  uses,  just  as  we  have  "  troy "  and  "  avoirdu- 
pois "  pounds  and  ounces.  Mr.  Atkinson  has  put  this 
question,  very  forcibly  and  concisely,  in  a  recent  Foriini. 
On  general  principles,  the  suggestion  may  be  considered 
a  good  one.  Though  the  "  natural  right  "  is  not  so  essen- 
tial as  to  transcend  public  safety  and  convenience,  it 
ought  not  to  be  overlooked.  There  is  no  reason  why 
those  who  may  prefer  the  silver  standard  should  not  be 
allowed  the  fullest  opportunity  to  use  it,  if  they  are  pre- 
vented from  using  it  in  violation  of  present  obligations. 

Unfortunately,  however,  the  law  limiting  the  legal- 
tender  power  of  such  free-coined  dollars  to  silver  con- 
tracts, however  clear  its  language  might  be,  would  not  in 
practice  be  sufficient  to  prevent  their  use  in  violation  of 
obligations.  Eighteen  years  ago  this  government  began 
to  coin  a  "  trade  dollar,"  which  was  at  first  legal  tender 
in  payments  of  five  dollars  or  less,  but  was  in   1876  de 


4IO         ECONOMIC  AND   INDUSTRIAL   DELUSIONS. 

prived  of  that  limited  power,  so  that  nobody  was  there- 
after under  obligation  to  receive  it  on  any  terms  for  any 
debt.  Nevertheless,  as  we  all  remember,  millions  of  those 
coins  came  into  circulation,  passing  as  dollars  among  the 
poor  and  uninstructed,  tliough  rated  at  ninety  cents, 
more  or  less,  among  those  who  were  shrewd  enough  to  be 
informed  as  to  their  real  status.  They  came  from  the 
government,  and  had  the  name  Dollar  upon  them  ;  they 
were  thus  made,  for  thousands  of  our  citizens,  as  good  as 
any  dollar.  I  heard  again  and  again  from  intelligent 
people,  while  these  coins  were  in  circulation,  bitter  com- 
plaints against  the  "repudiation"  practised  by  our 
government  in  refusing  to  accept  them  for  something 
they  were  never  meant  to  be,  a  full  legal-tender  dollar. 
It  was  in  response  to  these  complaints,  not  to  any  real 
obligation  upon  the  government,  that  Congress  a  few 
years  ago  made  provision  for  their  redemption.  The 
lesson  of  this  experience  is  easy  indeed  to  read.  The 
coinage  of  the  "  trade-dollar  "  was  a  mistake,  by  which 
the  poorer  people  suffered.  Like  all  other  experiments 
upon  the  coinage  that  have  ever  been  made,  in  this 
country  and  in  others,  it  served  only  to  show  that  any 
measure  ^vJnch  casts  a  doubt  upon  the  standard  of  value  is 
oppressive  to  the  poor  man  by  affording  those  who  have 
him  at  their  mercy  additional  opportunities  for  cheating 
him.  Mr.  Atkinson  will  not  need  to  be  taught  this 
lesson,  for  the  object  of  his  suggestion  was  very  plainly  to 
point  a  moral  rather  than  to  recommend  a  measure  of 
practical  legislation.  If  noticed  at  all  by  the  silver  men, 
his  paper  will  clearly  bring  out  the  fact  that  what  they 
desire  of  a  silver  dollar  is  less  the  honest  payment  of 
future  contracts  based  on  silver,  than  the  dishonest  pay- 
ment of  present  contracts  based  on  something  else ;  and 
with   that  view  he   evidently  wrote   it.     If,  in  despair  of 


THE   SILVER   QUE  SI  ON.  4II 

their  own  unlimited  legal-tender  silver  scheme,  they 
should  take  up  with  any  such  project  as  this,  it  would 
only  be  for  the  purpose  of  making  what  they  could  by 
forcing  other  dollars  on  people  at  a  valuation  which 
belonged  to  gold  dollars.  Some  profit  could  be  realized 
by  the  mine-owners  in  that  way,  doubtless,  at  the  expense 
of  the  needy  and  ignorant ;  but  no  mortgage-holder  could 
be  so  beguiled.  The  scheme  would  have  nothing  in  it  for 
any  who  owe  money  on  land. 

Does  the  prospect  appear  discouraging,  then,  for  any 
increase  in  the  circulation  of  silver  by  legislative  act? 
Can  no  measure  be  devised,  which  will  accomplish  this 
end  by  altogether  honorable  means,  and  be  at  the  same 
time  able  to  command  votes  enough  to  pass  it  ?  What 
can  Congress  do  for  silver,  any  way  ?  I  cannot  see  that 
the  great  mass  of  the  people  arc  interested  in  having 
Congress  do  anything  whatever  for  silver.  The  people 
would  be  permanently  better  off  if  Congress  should  undo 
the  ill-judged  things  it  has  already  done.  It  has  been 
effectually  disproved  that  the  amount  of  money — even 
the  amount  of  specie — in  circulation  has  any  important 
influence  on  the  well-being  of  the  country,  at  ordinary 
times ;  for  the  Treasury  reports  have  shown  considerable 
changes  in  this  amount  when  there  was  no  change  in  the 
general  condition.  The  quality  of  our  currency,  not  the 
quantity,  is  what  most  urgently  calls  for  wise  regulation. 
It  is  quality,  not  quantity,  which  most  concerns  the 
people.  Let  the  government  constantly,  scrupulously, 
jealously  preserve  that — let  it  hold  as  its  first  and  highest 
duty  to  see  that  every  coin  or  bill  which  it  permits  its 
citizens  to  call  a  dollar,  is  always  and  everywhere  as  good 
as  the  best  dollar,  and  the  volume  of  the  circulation  will 
adjust  itself.  There  will  be  enough  of  credit-currency  to 
satisfy  all  needs,  when  credit  is  assured  the  right  kind  of 


412        ECONOMIC  AND  INDUSTRIAL   DELUSIONS. 

basis.  What  architect  would  thank  the  mason  for  build- 
ing his  foundation  a  foot  or  two  higher,  if  it  were  made 
less  steady  and  solid  by  the  added  material  ? 

In  regarding  the  amount  of  money  in  circulation  as  of 
minor  importance  to  the  people,  at  ordinary  times,  I  am 
by  no  means  blind  to  the  fact  that  there  are  times  when 
the  deficiency  of  good  money  gives  rise  to  sore  distress. 
Such  a  deficiency  is  the  very  essence  of  the  commercial 
crisis ;  next  to  want  of  confidence,  want  of  specie  is  the 
best  remembered  feature  of  the  terrible  years  1837,  1857, 
1873.  But  it  cannot  be  too  strenuously  maintained  that 
the  preventive  for  this  monetary  stringency  is  not 
increased  activity  of  the  mints  ;  cohmig  money,  and  putting 
it  where  people  most  want  it,  are  widely  different  things. 
Panics  have  not  been  preceded  by  reductions  in  the  coin- 
age, and  they  have  generally  been  preceded  by  increases 
in  it.  The  total  amount  coined  at  our  mints  in  the  seven 
years  1830  to  1836  was  about  equal  to  that  in  the  whole 
thirty-seven  years  between  the  establishment  of  our  first 
mint  and  1830.  That  in  the  seven  years  1850  to  1856,  in 
consequence  of  the  California  discoveries,  was  nearly 
double  that  in  the  whole  fifty-seven  years  preceding 
1850;  being  320  million  dollars  to  190  million.  The 
volume  of  our  coinage  fell  off  greatly  after  suspension  of 
specie  payments  ;  but  it  had  been  slowly  increasing  for 
some  years  before  1873,  ^^'^  "^^'^s  larger  that  year  than  any 
since  1861.  Since  the  panic  did  not  set  in  until  near  the 
end  of  the  year  1873,  there  is  no  doubt  that  it  came  in 
the  very  face  of  a  marked  revival  of  activity  in  our  mints. 
I  grant  that  an  ample  coin  reserve  is  a  superb  balance- 
wheel  in  time  of  commercial  distress,  but  I  find  in  that 
fact  no  reason  whatever  for  increased  coinage  by  govern- 
ment. When  the  speculative  impulses  of  the  people  are 
preparing  the  way  for  a  panic,  money  so  distributed  can 


THE   SILVER   QUESTION.  4I3 

never  be  a  safeguard.  The  easier  it  comes,  the  easiei 
it  is  spent ;  the  cautionary  coin  reserve  is  neglected,  and 
the  specie  increase  is  found  to  have  disappeared  when 
it  is  most  needed. 

The  interest  of  the  laborer,  in  having  no  money  in 
circulation  but  the  very  best  money,  is  one  with  that  of 
the  capitalist — only  keener,  in  that  the  capitalist  has 
means  of  protection  from  depreciated  currency  that  he 
has  not.  As  in  other  instances,  those  here  in  opposition 
to  the  laborer  are  not  the  employers  of  labor  with  whom 
he  co-operates,  but  the  speculators  who  thrive  by  public 
disorders  and  the  sharpers  who  grow  rich  by  fleecing  him. 
No  betrayal  of  confidence  could  be  less  pardonable,  than 
seducing  our  laboring  fellow-citizens  into  the  movement 
for  "  cheap  money." 


INDEX. 


Agricultural  Implement  Herald,  In- 
dianapolis, answered,  337 

Agricultural  implements,  affected  by 
protected  iron,  99 ;  exporters  of, 
embarrassed,  114,  315  ;  the  interest 
one  with  the  farmer's,  253  ;  at  lower 
prices  to  foreign  customers,  265, 
315,  330,  338,  348  ;  cost  (of  a  plow), 
332,  333.  339.  341  ;  should  be  free, 
332 

Agriculture,  see  Farmer 

Aldrich,  Nelson  W.,  tin-plate  predic- 
tions, 326 

Alliance,  Farmers',  its  activity,  286, 
294  ;  sub-treasury  and  land-loan 
schemes,  295  ;  currency  policy,  299, 
357  ;  serving  the  Protectionists,  302 

Allison,  see  Bland 

Anglo-Saxon  stock  and  industrial 
progress,  122 

Argentine  monetary  mistakes,  299, 
406.   See  also  South  American 

Armour  &  Co.  and  duty  on  hides,  283 

Astronomy,  disbelief  in  its  teach- 
ings, 3 

Atkinson,  Edward,  on  iron  and  steel, 
304,  308,  317  ;  on  cost  of  lalior, 
348  ;  his  plan  for  free  coinage,  409 

Australia,  see  New  South  Wales,  Vic- 
toria 

Axes  and  saws  protected,  108 


B 


Bageliot,  Walter,  quoted,  396 
Balance    of    trade,    cannot    be    kej^t 
favorable,   50  ;  tariffs  may  make  it 


adverse,  52  ;  per  inhabitant  (table), 
58  ;  gradual  unfavorable  turns  and 
sudden  recoveries,  64  ;  British,  65, 
145,  258  ;  in  Protectionist  teaching, 
67,  254  ;  test  by  coincidences,  68  ; 
by  two-year  intervals,  69  ;  by  groups 
of  years,  73  ;  law  of  disconnection, 
76,  258  ;  turns  in  i838-'40  and 
1874-78,  77,  258  ;  associated  with 
crises,  85,  259  ;  with  independence, 
156  ;  unchanged  by  export  taxation, 
261 

Barley,  importations,  224  ;  protected, 
281 

Bastiat,  Frederic,  his  anti-sunlight 
petition,  193 

Bi-metallism,  see  Coinage 

Blaine,  James  C,  on  panic  of  1857, 
86 ;  refuted  by  McCulloch,  89  ;  on 
recijjrocity,  134  ;  on  labor,  163  ;  on 
tariff  and  trusts,  176;  exposed  by 
Mills,  305 

Bland,  Richard  P.,  leader  of  silver 
Democrats,  403  ;  and  W.  B.  Alli- 
son, their  silver  dollar,  361,  405, 
407 

Brazil,  see  South  American 

British,  rotten  borough  representation, 
5  ;  hatred  of  slavery,  6  ;  sul)sidies 
to  shipi^ing,  9,  136,  344  ;  desires 
and  their  significance,  10,  124,  158. 
274  ;  origin  of  our  protective  sys- 
tem, 41  ;  war,  its  calamities,  42 ; 
expressly  favored  by  our  tariff,  52, 
145,  274  ;  inconi])leteness  of  statis- 
tics Ijack  of  1S56,  56  ;  commercial 
development  (table).  60 ;  export 
double  our  amount  of  merchandise, 
63  ;  balance  of  trade,  65,  145,  258; 


415 


4i6 


JMDEX. 


prices  of  steel  rails,  112,  273  ;  real 
and  fancied,  contrasted,  126;  in- 
difference to  our  concerns,  127,  133, 
159  ;  our  chief  commercial  rivals, 
136,  151  ;  great  maritime  develop- 
ment, 139,  145,  161,  344  ;  recovery 
after  Crimean  War,  144 ;  weaker 
than  we  where  protection  is  asked, 
154  ;  interdependence  with  us,  157; 
progress  since  1846,  166,  260;  its 
causes,  168  ;  wages  compared  with 
ours,  173  ;  poor,  their  distress,  174  ; 
emigration,  177  ;  compared  in  in- 
dustrial opportunities,  178,  277  ;  in- 
efficiency of  laborers,  183,  347  ; 
large  exports  in  1815,  195  ;  manu- 
facture of  wood-screws,  221  ;  invest- 
ments here,  258  ;  demand  for  our 
agricultural  products,  291  ;  trade, 
how  to  increase  it,  292  ;  prices  of 
iron  and  steel,  305,  309,  329  ;  loss 
of  supremacy  in  iron  industry,  310, 
317  ;  production  of  tin  plate,  319  ; 
gold  standard,  360 
Burke,  Edmund,  definition  of  party, 

17 

C 

Calhoun,  John  C,  and  tariff  of  1833, 

California,  effects  of  gold  discoveries, 
76,  255,  257,  364,  412  ;  rate  of 
wages,  166  ;  mining  industries,  182 

Carey,  Henry  C,  advocate  of  protec- 
tion, 7  ;  on  tariffs  and  crises,  87  ; 
attacks  the  Atlantic  Ocean,  130 

Carpets,  high  duties  on,  283,  290 

Cernuschi,  Henri,  bi-metallist,  363, 
366_ 

Christian  religion  opposes  war,  44, 
47,  125  ;  allied  to  commerce,  48 

Clarke,  Albert,  letter  and  reply,  330 

Clay,  Henry,  active  part  in  tariff  of 
1833,  87 ;  associated  with  protec- 
tive principle,  223 

Cleveland,  Grover,  misrepresented  in 
Republican  platform,  22,  25  ;  loss 
of  New  York  vote  in  i883,  24  ;  cd- 
ministration  contrasted  with  Fifty- 
first  Congress,  35  ;  advocacy  of  free 
wool,  201  ;  on  the  proper  function 
of  government,  236  ;  1887  message, 
315  ;  opposes  free  coinage,  356 


Coal,  price  advanced  by  tariff,   100 ; 

the  mining  industry,    175  ;    failing 

British  supply,  310 
Cobden  Club,  in   fiction  and  in  fact, 

127,  274 
Coffee,  prices,  289  ;  and  tea,  why  free, 

134,  353 

Coinage,  acts  of  1878  and  1890  essen- 
tially bounties,  239,  403,  405  ;  so- 
called  profits  and  real  losses,  240 ; 
1890  act  suggests  sub-treasuries, 
295;  change  in  1834,  299,  370; 
double,  not  found  on  equal  footing, 
360;  how  possible,  361,  372,  401  ; 
in  partnership  with  other  countries, 
363  ;  defeated  by  free  silver,  366, 
372  ;  effects  of  1878  act,  367 ; 
change  in  1853,  370;  useful  for 
purposes  not  monetary,  371  ;  Mint 
Act  of  1873,  373,  395  ;  glut  to  fol- 
low free  silver,  393  ;  full-weight 
dollar,  407  ;  and  natural  right,  409  ; 
and  crises,  412.  See  also  Gold, 
Silver 

Colbert's  protective  system,  242 

Collins  steamship  line,  141 

Commerce,  see  Balance,  Exports,  Free 
Trade,  Imports,  Reciprocity 

Confederates,  why  they  lean  to  free 
trade,  11,  38,  278  ;  received  on 
equal  terms  as  a  necessity,  39  ;  in 
Virginia,  40 

Congress,  Fifty-first,  its  extravagance, 
35>  356  ;  special  acts,  36,  286.  See 
also  Coinage,  Pensions,  Tariff  of 
1890 

Copper,  advantages  enjoyed  by  mine» 
owners,  100,  loi 

Corn,  Indian,  production  and  prices, 
205  ;  proportion  of  exports,  209, 
287,  291  ;  protected,  281 

Cotton,  its  use  to  replace  wool  en. 
couraged  by  protective  system,  102  ; 
its  manufactures  exportable,  136, 
346  ;  exports,  291  ;  and  wheat  pay 
for  imported  tin-plate,  319,  322 

Crisis,  commercial,  why  connected 
with  the  tariff,  84,  259  ;  and  an  ad- 
verse trade-balance,  85  ;  differs  from 
hard  times,  97  ;  might  come  from 
silver  inflation,  397  ;  and  coinage, 
412  ;  — of  1818,  under  increased 
duties,  88  ;  — of  1837,  and  tariffs  of 


INDEX. 


417 


1828  and  1833,  87,  25Q  ;  McCulloch 
on  its  sources,  89  ;  on  its  effects, 
94  ;  — of  1857,  its  causes,  86,  88,  95, 
259  ;  — of  1873,  its  severity,  87  ;  Mc- 
Culloch's  testimony,  96,  398 

Cronemeyer,  W.  C,  on  tin-plate  pro- 
tection, 326 

Cullom,  Shelby  M.,  quoted,  168 

Cunard  steamship  line,  146 

Cutlery,  duty  increased,  2S8,  290 


D 


Debtor  class,  temporary  gains  and 
final  loss  by  debased  currency,  376, 
392  ;  its  claims  not  paramount,  379 

Delusions,  general  nature,  i  ;  feeble, 
2  ;  political,  historical  instances, 
5  ;  parallel  with  the  protective,  6  ; 
their  discussion  negative,  121  ;  their 
cure  in  experience,  246  ;  their  aid  to 
silver  schemes,  387 

Democratic  party,  attitude  toward 
protection,  23,  404  ;  and  free  wool, 
27  ;  now  unsectional,  32  ;  best 
friend  to  the  negro,  34  ;  do.  to 
public  credit,  36  ;  and  sugar  pro- 
duction, 134  ;  policy  borrowed, 
294  ;  papers  and  what  they  pub- 
lish, 349  ;  addressed  in  silver  papers, 
356,  399  ;  imposed  on  by  silver 
men,  403  ;  and  the  full-weight  dol- 
lar, 407 

Denslow,  Van  Buren,  advocate  of  pro- 
tection, 8  ;  on  American  and  foreign 
labor,  219  ;  on  protective  and  reve- 
nue tariffs,  224 

Dispatch,  York,  answered,  333 

Drawbacks  on  imported  raw  materials, 
unsatisfactory,  328,  343  ;  tell  in 
favor  of  foreign  purchasers,  338 

Dry  Goods  Economist,  investigation  of 
woollen  factories,  102 

Dutton,  Clarence  E.,  paper  on 
"Money    Fallacies,"   382 

Duty,  see  Protection,  Tariff 


E 


Edmunds,    George    F.,    on    prices  of 

coffee,  289 
Education,     needed     among     British 


working  men,  175  ;  national  aid 
to,   232 

Electrical  apparatus,  and  duty  on  cop- 
per,  lOI 

Elliott,  Ezekiel  B.,  population  tables, 

England,  see  British 

Exports,  large  in  1806  and  1807,  57  ; 
per  inhabitant  (table),  58  ;  increas- 
ing since  1850,  66  ;  test  by  two-year 
intervals,  69  ;  one  year  insufficient, 
71  ;  test  by  groups  of  years,  73  ; 
law  of  connection,  75,  261  ;  mis- 
statements of  law  corrected,  78  ; 
examples  under  it,  79  ;  of  agricul- 
tural implements,  99,  114;  kind 
sent  to  South  America,  136  ;  how 
apparently  and  how  really  paid  for, 
256  ;  their  taxation  would  not  alter 
trade  balance,  261  ;  chief  agricul- 
tural, 291  ;  affected  by  tin-plate 
tax,  320  ;  not  helped  Ijy  drawbacks, 
328  ;  of  U.  S.  manufactures,  345. 
See  also  Balance 


Farmer,  two  effects  of  high  duties,  10, 
285,  309  ;  how  burdened  by  tobacco 
tax,  28  ;  his  interest  upheld  by  ex- 
Confederates,  39,  278  ;  amused  by 
reciprocity,  134  ;  especially  subject- 
ed to  home-market  appeal,  199, 
214  ;  his  protection,  200,  280  ;  when 
helped  by  market  near  by,  211, 
266  ;  competition  threatening  him, 
218,  277  ;  paying  people  for  not 
competing,  220  ;  how  he  does  the 
opposite,  222,  315  ;  addressed  in 
open  letters,  250,  286  ;  considered 
in  new  tariff  acts,  251,  280,  339  ; 
interest  coincides  with  farm  imple- 
ment maker,  253 ;  present  depres- 
sion, 279,  2S4 ;  leading  exports, 
280  ;  temptations  under  easy  loans, 
297  ;  finally  pays  their  cost,  298  ; 
and  free  coinage,  301,  359,  393  ; 
and  tin-plate  duty,  320  ;  how  plun- 
dered, 338.     See  also  Alliance 

Fessenden,  William  P.,  decision  on 
tin-plate  tax,  326 

Flax,  its  jirotection,  2or 

Foreign  producers,  their  alleged  pay- 


4i8 


INDEX. 


ment  of  duties,  lo,  224,  269,  288, 
2gi  ;  accessories  and  home  consum- 
ers jirincipals,  33  ;  their  protection 
at  cost  of  our  exporters,  114,  317; 
what  they  inleiul  to  do  with  prices, 
194  ;  must  increase  sales  if  they  ])ay 
duties,  271  ;  how  they  really  suffer, 
275.      See  also  British,  etc. 

Forum,  Y,.  Atkinson  in,  409 

Franklin,  Benjamin,  on  war  and 
peace,  46 

Free  trade,  in  Mills  Bill,  etc.,  25  ; 
favored  by  Confederates,  38  ;  allied 
to  Christianity,  48  ;  to  be  credited 
with  our  industrial  progress,  115  ; 
its  success  here  overwhelms  protec- 
tionist maxims,  116  ;  approved  by 
other  tests,  120;  could  not  be  bet- 
ter for  England  than  for  us,  126  ; 
British  moderation  in  advancing  it, 
128  ;  reciprocity  a  dilution  of  it, 
131  ;  how  destructive  to  shipping 
interests,  139 ;  does  not  equalize 
wages,  165  ;  increases  productive 
capacity  of  labor,  172  ;  and  con- 
stancy in  prices,  210  ;  and  diversion 
of  labor  to  farming,  215,  277  ;  in 
theory  and  practice,  247  ;  and  free 
raw  materials,  340 

Freedom,  requires  free  trade,  33,  54  ; 
transgressed  by  forcing  citizens  into 
involuntary  jiartnership,  no 

F"rench,  nobility  before  the  Revolu- 
tion, 5,  34  ;  solicitude  over  our  com- 
mercial treaties,  133,  161  ;  subsidies, 
139;  assignats,  299,  406;  bi- 
metallic coinage,  360 


Ci 


Gazette,  York,  articles  from,  333,  340, 

356 

George,  Henry,  on  labor  in  coal  dis- 
tricts, 174  ;  on  direct  taxation,  229 

German,  trade  with  South  America, 
i6r  ;  emigration,  177  ;  call  for  pro- 
tection, 182  ;  wages  and  efficiency, 
183  ;  coinage,  360,  375 

Giffen,  Robert,  statistics  of  British 
progress,  166;  on  "the  American 
Silver-Bubble,"  396,  404 

Gold,  its  exportation  prohibited,  51  ; 
movements    in    foreign    trade,    64  ; 


not  exported  by  British,  65  ;  effects 
of  discoveries,  76,  255,  257,  364, 
412  ;  premium  on,  and  census  of 
1870,  103  ;  production  in  Victoria, 
1 19  ;  cheap  here  desjiite  high  wages, 
187  ;  production  needs  710  encour- 
agement, 238  ;  our  l^asis  of  values 
since  1834,  301,  368,  381,396,400; 
compared  with  silver  as  standard, 
363,  400,  402,  408  ;  demonetized 
by  free  silver,  369,  384,  395  ;  coin- 
age debased  in  1834,  370  ;  disap- 
peared from  coinage  until  1834, 
371.  395;  "commodity"  value, 
300.     See  also  Money 

Government,  its  proper  functions,  15, 
236,  241,  399  ;  regulation  of  cur- 
rency supply,  82,  381,  411  ;  de- 
posits in  State  banks,  91  ;  regula- 
tion of  industries,  98,  188,  242  ; 
forcing  citizens  into  business  part- 
nerships, no,  405  ;  dependence  on, 
113  ;  regulation  of  ocean  commerce, 
130 ;  magic  power,  162  ;  giving 
employment,  219 ;  needs  import 
duties,  227  ;  first  need,  234  ;  in  the 
loan  business,  295,  3S3  ;  supported 
by  labor,  298  ;  cannot  give  value, 
357.  3S4  ;  credit  the  basis  of  all  but 
gold  currency,  368,  396 

Graphical  method,  superior  to  tabular 
for  illustration,  55 

Great  Britain,  see  British 

Greeley,  Horace,  advocate  of  protec- 
tion, 8  ;  against  transportation  of 
agricultural  products,  130 

Grosvenor,  William  M.,  on  protection 
of  iron  and  steel,  311 


H 


Hamilton,  Alexander,  references  to 
his  report  on  manufactures,  105, 
108,  155,  169,  215,  336,  350;  his 
industrial  aims,  242 

Harbor  and  river  improvements,  231 

Hardware,  New  York,  tin-plate  cal- 
culation in,  326 

Hawthorne,  Nathaniel,  on  effects  of 
government  aid,  114 

Hebrew  influence  on  Protestant  refor- 
mation, 233 

Hides,  why  free  of  duty,  134,  283 


WDKX. 


419 


Hill,  David  B.,  ally  of  liquor  interest, 
24 

Home  market,  a  specimen  quibble, 
10,  211,  267  ;  not  built  up  by  cut- 
ting off  foreign  markets,  151  ;  its 
three  uses,  igg  ;  insufficiency,  209, 
294  ;  laws  needed  to  sustain  it,  210, 
267  ;  taxes  twenty  to  benefit  one, 
214,  266  ;  obtained  by  protecting 
tin-plate,  320 

Home  Market  Club,  Boston,  Mass., 
letter  from  secretary  and  reply, 
330  ;  second  letter  to,  340 

Hyman,  M.  R.,  answered,  338 


I 


Immigration,  why  it  comes,  177  ;  its 
amount,  218 

Imports,  of  specie,  50,  173,  254  ;  ex- 
cessive, 1806  to  1818,  57  ;  pre- 
vented, 62  ;  affected  without  affect- 
ing exports,  79 ;  excesses  affect 
tabular  duty-rates,  85  ;  of  cheap 
goods,  192  ;  of  potatoes,  203  ;  of 
agricultural  products,  284  ;  should 
be  larger,  353.  See  also  Balance, 
Tariff. 

Independence  and  protection,  155 

Inman  steamship  line,  141 

Interest,  rate  higher  here,  153  ;  affec- 
ted by  government  underbidding, 
296  ;  increased  by  debasing  the 
currency,  378 

Iron  and  steel,  their  protection  de- 
pressing, 99,  312,  316,  336  ;  expor- 
tation prevented,  137  ;  in  ocean 
vessels,  144  ;  improvements  since 
1846,  152  ;  varying  effect  of  duties, 
227  ;  product  in  1890,  304  ;  excess 
of  cost  in  U.  S.,  305  ;  capital  em- 
ployed in,  308  ;  why  prices  have 
decreased,  310  ;  our  supremacy,  314 

Iron  ore,  taxed,  100  ;  exhaustion  of 
European,   310  ;    as    raw  material, 

334 
Italian   subsidies,    139  ;     emigration, 
177  ;  coinage,  360 


J 


Jackson,    Andrew,    jiart    in     crisis    of 
1837.  88 


Jasper,  John,  solar  theories,  2 
Jefferson,    Thomas,    and  name  "  Re- 
publican,"   36;    platform  in    iSoo, 
48 

K 

Kasson,  John  A.,  (juoted,  189 

L 

Labor,  the  laborer  and  his  hire  :  quib- 
ble on  duties,  wages,  and  prices,  9, 
180  ;  on  replacing  home  by  foreign, 
10,  80,  219  ;  affecting  cost  of  ships, 
138,  144  ;  wages  here  compared 
with  British,  153,  173,  347;  impor- 
tance of  question,  163  ;  courted  by 
Protectionists,  164  ;  condition  in 
Great  Britain,  166,  260 ;  in  New 
South  Wales,  168  ;  by  the  manufac- 
turer's testimony,  170  ;  made  effec- 
tive by  free  trade,  172  ;  oppressed 
by  trusts,  175  ;  less  costly  at  high 
daily  wages,  181,  318,  347  ;  what 
kind  needs  protection,  188 ;  how 
favored  by  machinery,  igo  ;  pauper 
competitors,  191  ;  confined  to  agri- 
culture, 215,  277  ;  displaced  by 
actual  not  potential  purchases,  218  ; 
under  tariff  of  1890,  245  ;  must  pay 
every  government  bounty,  277,  298, 
355  ;  in  Pennsylvania  iron  indus- 
tries, 313;  on  tin  plate,  321,  326; 
wages  in  York,  Pa.,  343  ;  suffers  by 
depreciated  money,  379,  392,  394, 
413 

Latin    Union,   coinage   at    15^,   360, 

375,  393 
Lead  ore,  its  protection,  282 
Lincoln,    Abraham,    acknowledgment 
of  his  election,   37  ;    appointments 
as  head  of  the  Treasury,  226  ;  second 
inaugural  quoted,  234 
Liquors  (alcoholic),  influence  on  Presi- 
sidential  vote  in  1888,   24  ;   cheap, 
fate  of  plank  calling  for,  30  ;  pro- 
duce misery  among  laboring  people, 

.175 

Literary  production,  here  discouraged, 
113  ;  defects  of  new  copyright  law, 
194 

Lodge,  Henry  C,  essay  on  "  The  Co- 
lonial Spirit,"  162 


420 


INDEX. 


Lotteries,  their  policy,  109  ;  how  their 
success  might  he  increased,  iii 

Lumber,  sometimes  increased  in  price, 
100  ;  in  shipbuilding,  144  ;  admit- 
ted free  by  special  acts,  272  ;  in  a 
plow,  334,  341  ;  its  manufactures 
exportable,  346 


M 


Maish,  Levi,  quotes  essay  on  "Pro- 
tection and  Agriculture,"  250 

Manufactures,  and  Republican  party, 
20 ;  growth  by  the  census,  103, 
264  ;  the  interest  united  for  protec- 
tion, 104 ;  how  diversified,  107, 
350;  change  since  1846,  152;  and 
independence,  155  ;  of  advantage  to 
farmer,  211  ;  need  a  home  market, 
215  ;  how  dependent  on  protection, 
216 ;  how  exportable,  264,  345  ; 
compensating  duties,  272 ;  want 
cheaper  raw  materials,  331,  336, 
340 ;  what  is  raw  material,  333, 
339,  341.  See  also  Cotton,  Iron, 
Woollen 

McCuUoch,  Hugh,  tariff  attitude,  38  ; 
testimony  on  crises,  89  ;  bi-metallist, 

363 

McKinley,  William,  use  of  British 
desire  for  trade,  10  ;  prepares  tariff 
plank  of  1888,  21  ;  on  tariff  and 
favorable  balance,  67,  254  ;  blow  at 
England,  i6r  ;  flies  to  relief  of 
onions,  203  ;  pretences  of  reductions 
on  certain  hardware,  221,  288  ;  re- 
port on  tariff  bill,  251  ;  campaign 
speech  in  18SS,  254,  270;  sugar  re- 
duction, 288  ;  protection  with  inci- 
dental revenue,  318.  See  also  T&ri^ 
of  1890 

Medicines,  quack,  typical  of  delu- 
sions, 4 

Merchant  vessels,  British,  9,  145  ;  per 
inhabitant  (table),  58  ;  doctrine  of 
stimulation,  135  ;  reason  for  our 
decline,  138,  331,  336  ;  decreases 
in  1811,  '18,  and  '29,  139;  facts 
shown  in  the  chart,  143  ;  two-year 
test  insufficient,  147  ;  test  by  un- 
equal periods,  149  ;  coastwise  ton- 
nage suffers  worst,  150 

Mexico,  compared  with  New    South 


Wales,  117  ;  daily  wages,  182  ;  our 
duty  on  its  lead  ore,  282  ;  silver 
standard,  360,  401.  See  also  South 
American 

Miller,  Warner,  reports  on  tariff  and 
agriculture,  202 

Mills,  Roger  Q.,  his  tariff  bill,  25, 
27,  354  ;  North  Americati  Review 
article,  304 

Morrill,  Justin  S.,  see  Tariff,  war 

Money,  effect  of  bringing  it  in,  50, 
173.  254  ;  Treasury  tables  show  no 
imports  or  exports  before  1821,  57  ; 
keeping  it  at  home,  82  ;  need  for 
more  of  it,  83,  381,  411  ;  replaced 
by  credit  in  business,  366  ;  quality, 
not  quantity,  essential,  366,  384, 
411  ;  our  various  kinds,  396  ;  infla- 
tion of  1890,  406  ;  scarcity  and  in- 
creased coinage,  412 


N 


Negro,  now  best  served  by  Democratic 
party,  34  ;  used  against  the  farmer, 
278 

New  England,  rate  of  wages,  166,  173, 
182  ;   origin  of  popular  education, 

233 
New    South    Wales,    compared    with 

Mexico,    117  ;    with  Victoria,  119  ; 

may  return  to  higher  duties,  121  ; 

condition  of  laboring  people,  l68  ; 

immigration  to,  177 
New  York  State,  carried  by  barter  in 

1888,  24 
North  American  Review,  tariff   arti- 
cles, 89,  304 


O 


Ohio,  wool  interest,  28,  339  ;  vote  in 

1889  and  1890,  103 
Onions,  their  protection,  202 


Panic,  see  Crisis 

Party  (political),  its  quality  variable, 
13;  constitutional  construction  ques- 
tion, 15;  Burke's  definition,  17. 
See  also  Republican,  etc. 


/A/DFX. 


421 


Paupers,  diminishing  in  England,  167, 
260;  as  laborers,  191,  318 

Pennsylvania,  election  in  i8go,  26  ; 
condition  of  miners,  174  ;  statistics 
of  iron  industries,  313  ;  other  in- 
dustries affected,  316,  number  of 
sheep,  339 

Pensions,  to  veterans,  etc.,  234;  when 
truly  honorable,    237  ;     their    cost, 

355 

Plow,  its  cost,  332,  333,  339,  341 

Porter,  Robert  P.,  Census  of  1890, 
56  ;  report  on  labor  in  Great  Bri- 
tain, 174 

Potatoes,  dug  with  hoe,  189  ;  effects 
of  their  protection,  203,  281  ;  table 
of  production,  values,  and  imports, 
206 

Prices,  and  true  value  of  money,  83, 
173.  255,  394  ;  before  1837,  92  ; 
after,  94;  enhanced  by  trusts,  176, 
206  ;  reduced  by  labor-saving  in- 
ventions, 191  ;  foreign  control  and 
free  trade,  194  ;  in  contracted  mar- 
kets, 208  ;  with  taxed  exports,  261  ; 
here  and  in  Europe,  268  ;  con- 
sidered in  deciding  who  pays  duties, 
270,  288  ;  — of  iron  and  steel,  99, 
100,  144,  304,  329 ;  of  coal  and 
lumber,  100;  of  steel  rails,  iii, 
273  ;  of  exported  agricultural  im- 
plements, 115,  265,  330,  338  ;  of 
leading  exports  to  Brazil,  136  ;  of 
necessaries  in  England,  167  ;  of 
cloth  and  gold  reciprocal,  187  ;  of 
wool,  200,  309,  339  ;  of  corn  and 
wheat,  205,  287  ;  of  potatoes,  206  ; 
of  silver,  240,  361,  375,  390,  395, 
405  ;  of  tin  plate,  319,  327  ;  of 
plow  materials,  332,  339,  341 

Protection,  parallel  with  slavery,  6  ; 
yet  unconquered,  7  ;  five  elements 
of  its  case,  8  ;  appeals  to  senti- 
ment, II  ;  taken  up  by  Republican 
party,  19  ;  alleged  American,  22, 
41  ;  in  the  Northwest  in  1888,  25  ; 
disasters  following  its  abandon- 
ment, 26  ;  Herbert  Spencer's  view, 
33  ;  prefers  a  part  to  the  whole,  29, 
34,  212  ;  associated  with  prodi- 
gality, 35,  355  ;  and  Confederates, 
40  ;  associated  with  war,  46,  125  ; 
may  make  an  adverse  trade-balance. 


52  ;  depressing  effect  on  industries 
using  iron,  99,  312,  316  ;  on  all 
manufacturing  for  export,  loi,  266, 
345  ;  on  copper  industries,  loi  ;  on 
woollen  manufacture,  102  ;  on 
manufactures  generally  (by  census), 
103,  264 ;  why  most  manufacturers 
cry  for  it,  104,  265  ;  industries  be- 
come diversified  without  it,  108  ; 
analogies  to  lotteries,  109  ;  on  steel 
rails,  III  ;  reversed  for  the  literar)' 
industry,  113;  its  hierarchy  of  in- 
dustries, 126  ;  must  act  reciprocally, 
if  at  all,  129,  157  ;  the  orthodox, 
130  ;  the  new,  131  ;  and  subsidies, 
135  ;  effect  on  our  shipping,  150  ; 
to  newer  industries,  152;  supporta- 
ble only  by  strength,  154  ;  and 
independence,  155  ;  chains  us  to 
delusion,  162  ;  its  effects  in  Eng- 
land, 16G  ;  became  a  national 
policy  about  1816,  170  ;  diminishes 
value  of  money,  173  ;  favors  trusts, 
175  ;  and  "  pluck-me  "  stores,  178  ; 
the  labor  that  needs  it,  188  ;  what 
its  home  market  does,  199 ;  on 
farm  products,  200  ;  little  of  our 
industry  dependent  on  it,  216;  and 
revenue  incompatible,  223,  226 ; 
and  silver,  239,  358,  387 ;  permits 
higher  prices  to  home  customers, 
265,  315,  331  ;  at  expense  of  labor, 
277  ;  reinforced  by  Alliance,  302 ; 
said  to  lower  prices,  309,  336  ;  of 
foreigners  at  our  expense,  317  ;  with 
incidental  revenue,  318  ;  on  tin- 
plate,  320  ;  carries  taxation  beyond 
highest  revenue  point,  352 


O 


Quibbles,  illustrated,  9 
R 

Rails,  steel,  duties  and  prices,  ill, 
273  ;  recent  growth  of  the  industry, 
152 

Reciprocity,  theory  of  treaties,  131  ; 
alarm  in  Europe,  132  ;  its  new  in- 
terpretation, 133  ;  and  the  farmer, 
290,  332  ;  7's.  home  market,  294 

Record,     Philadelphia,    extract    from 


422 


INDEX. 


letter  in,  25  ;  from  editorial,  250  ; 
articles  from,  251,  304,  318 
Republican  party,  changed  applica- 
tion of  its  liberal  construction,  16  ; 
irrelevancy  of  its  past  services,  17, 
253  ;  its  triumphs,  18  ;  when  its 
mission  terminated,  19  ;  tariff  ad- 
vocacy a  perversion,  20  ;  moral 
degeneracy  shown  in  last  national 
platform,  21  ;  carried  Indiana  and 
New  York  in  1888,  24  ;  would  re- 
duce revenue,  28 ;  its  whiskey 
plank  retracted,  30  ;  now  opposed 
by  the  true  Republicans,  31,  38  ; 
cultivates  sectional  hatred,  32  ;  use 
of  the  negro,  34,  278  ;  foe  to 
national  credit,  35  ;  in  Virginia, 
40  ;  advances  on  Democratic  lines, 
294 ;  on  government  and  silver, 
400 ;  deals  with  silver  men,  404, 
406 
River  and  harbor  improvements,  231 
Rusk,  Jeremiah  M.,  letter  to  farmers, 
251.  283 


Sandy  Spring,  Maryland,  instance 
under  home  markets,  212 

Saturday  Globe,  New  York,  articles 
from,   15S,  351,  399 

Saws  and  axes  protected,  108 

Selfishness,  two  kinds,  11 

Shearman,  Thomas  G.,  on  high-paid 
competitors,  183 

Sheep,  number  in  great  Northern 
States,  28  ;  in  Pennsylvania,  339 

Silver,  demands  of  mine  owners,  237, 
357.  390.  391  ;  how  the  dollar  cir- 
culates, 240  ;  made  supreme  by 
Alliance,  299  ;  standard  in  Mexico, 
etc.,  360  ;  legislation  to  stimulate 
its  production,  362,  393  ;  compared 
to  gold  as  measure  of  values,  363, 
400,  402,  408  ;  advantage  Europe 
would  take,  365  ;  free  coinage  de- 
feats bi-metallism,  366,  372  ;  cer- 
tificates, status  of,  367  ;  not  yet 
purchased  abroad,  36S  ;  our  earliest 
unit,  370,  3S9  ;  debased  in  1853, 
370  ;  less  coined  after  1S34,  371  ; 
legal  tender  law  changed  in  1S73, 
373.    385  ;    more   dollars   in    1S69, 


374  ;  the  trade-dollar,  374,  409 ; 
increased  production,  i87o-'73,  374, 
386 ;  increased  coinage  in  1873, 
380,  385  ;  would  drive  out  gold, 
384,  395  ;  how  kept  at  par  in 
Europe,  393 

Slavery,  type  of  political  delusion,  5 

Sloane,  William  M.,  on  pensions  and 
socialism,  234 

Smith,  Adam,  on  restriction  of  gold 
exportation,  51 

Soldier,  see  Pensions 

South  American  republics,  exports 
thither  repressed  by  protection,  52  ; 
Tribune  s  investigations,  53  ;  sub- 
sidized lines  to,  81,  136,  141 ;  del- 
egation to  Washington  conference, 
132  ;  our  commerce  indirect,  138  ; 
trade  in  British  hands,  161  ;  growth 
of  wheat,  222,  315  ;  demand  for 
farm  products,  291. 

Spanish,  prohibition  of  gold  export, 
51  ;  subsidies,  139 

Specie,  see  Gold,  Money,  Silver 

Spencer,  Herbert,  on  protective 
policy,  33 

Steel,  see  Iron,  Rails 

Subsidies  to  shipping,  examples  of 
assumptions,  g,  81,  135  ;  their  in- 
adequacy, 136,  231,  344  ;  advocated 
by  Secretary  Windom,  137  ;  our 
experience,  141,  344  ;  British  pay- 
ments so  called,  146,  344 ;  better 
than  nothing,  231,  315 

Sugar,  duty  cut  down  in  1890,  61,  134, 
288  ;  reciprocity  with  countries  pro- 
ducing it,  293 

Sumner,  William  G.,  on  buying  off 
competition,  220 

Swank,  James  M.,  report  on  iron  and 
steel,  311,  313 

Swiss   cotton    mills,    their  efficiency, 

183 

T 

Tableware,  increased  duty,  290 
Tammany  Hall,  its  objects,  40 
Tariff,  high,  and  high  wages,  g,  180 ; 
who  pays  it,  lo,  224,  269,  288,  291, 
350 ;  high,  on  farm  and  other  pro- 
ducts, 10,  28 5,  309  ;  varying  state- 
ments of  Treasury  Department,  56  ; 
and  large  importations,  57,  85  ;  two 


INDEX. 


423 


ways  of  reckoning  compared,  62  ; 
and  increase  in  exports  since  1850, 
66  ;  high,  and  favorable  balance, 
67,  76,  256  ;  test  by  coincidences, 
68  ;  by  two-year  intervals,  69 ;  one 
year  insufficient,  71 ;  test  by  groups 
of  years,  73  ;  and  export  law,  75  ; 
misstatements  of  law  corrected,  78  ; 
examples  under  it,  79 ;  assumed 
connection  with  crises,  84,  259; 
rates  on  agricultural  -  implement 
raw  materials,  100  ;  effect  on  manu- 
factures, by  census,  103  ;  high  in 
Mexico,  117  ;  low  in  New  South 
Wales,  118  ;  rather  high  in  Victoria, 
119;  effect  on  merchant-marine 
ownership,  147,  150  ;  changes  from 
revenue  to  protective,  227  ;  specific 
and  ad  valorem,  228  ;  how  best 
mitigated,  229  ;  advocated  for  dou- 
ble purpose,  230  ;  unjust  because 
partial,  241  ;  how  planned  and  car- 
ried, 243,  273  ;  mischiefs  of  ideal- 
ization, 248  ;  brings  but  limited 
revenue,  352  ;  — of  1828  and  crisis  of 
1837,  87,  259;  — of  1833,  how 
passed,  87  ;  of  1833  and  '46,  sup- 
posed effect  on  balance,  76  ;  of 
1833,  '72,  and  'go,  increased  free 
imports,  61  ;  — of  1846,  chiefly  ad 
valorem,  86  ;  and  increase  of  ship- 
ping, 140,  148  ;  — of  1857,  tax  on 
iron,  145  ;  — war,  led  to  party  con- 
troversy, 19  ;  voted  by  low-tariff 
men,  226  ; — of  1890,  effects,  75,  287, 
339  ;  motive  of  wool  increase,  102  ; 
reciprocity  provision,  134,  290;  how 
received  in  Europe,  160  ;  raises  duty 
on  potatoes,  203  ;  used  by  Philadel- 
phia carpet  dealers,  245  ;  what  its 
passage  proves,  249  ;  special  exam- 
ination, 280 

Taussig,  F.  W.,  on  variations  in 
tabular  duty-rates,  56 ;  steel-rail 
tables,  112 

Taxation,  of  incomes,  227  ;  direct, 
has  fewest  evils,  228,  354  ;  injustice 
of,  for  partial  benefits,  241.  See 
also  Tariff 

Tea,  labor  producing,  165  ;  and  coffee, 
why  free,  134,  353 

Theory,  essential  in  mental  operations, 
247 


Thompson,  Robert  E.,  advocate  of 
protection,  8  ;  on  panic  of  1857, 
86  ;  on  tariff  of  1828,  139 

Timber,  see  Lumber 

Times,  London,  old  extracts  from,  160; 
— New  York,  McCulloch's  letter  in, 
89 

Tin  plate,  an  example  under  export 
law,  79  ;  effects  of  its  protection, 
282,  327  ;  in  facts  and  figures,  318  ; 
how  made  in  Wales,  319 ;  using 
imported  workmen,  323,  327 

Tobacco,  importance  as  a  staple,  29 

Treaties,  commercial,  see  Reciprocity 

Tribune,  Chicago,  quoted,  396 ;  — 
New  York,  leading  in  good  and 
bad  causes  alike,  8  ;  charge  against 
Gov.  Hill,  24  ;  on  neglect  of  pro- 
tection in  the  West,  25  ;  sends  cor- 
respondent to  S.  America,  53  ; 
holds  rod  over  manufacturers,  106, 
244  ;  neglects  New  South  Wales, 
121  ;  on  effects  of  Pan-American 
conference,  133 ;  on  British  ship- 
ping, 146  ;  use  of  extracts  from 
London  Times,  160  ;  on  English 
laborers'  distress,  174  ;  on  protec- 
tion of  onions,  202  ;  at  work  for 
reciprocity,  293  ;  discussion  of  iron 
and  steel  prices,  304  ;  plea  for  the 
duties,  309 ;  Mr.  Grosvenor  with, 
312  ;  letter  printed  in,  328  ;  cor- 
roborates Home  Market  Club,  340, 

343 
Trusts  and  trade  combinations,  in 
whiskey  in  Illinois,  30  ;  oppressive 
to  labor  and  fostered  by  protection, 
175,  245  ;  principle  they  depend  on, 
208  ;  payments  to  escape  competi- 
tion, 220  ;  of  silver  producers,  23S, 
358,  361,  376,  387,  404;  cause 
higher  prices  to  home  customers, 
265 

\' 

Victoria,   compared  with   New   South 

Wales,  119 
Virginia,  Republican  party  in,  40 

W 

Wages,  .f<'<'  Labor 

Walker,    Francis   A.,    tariff   attitude. 


424 


INDEX. 


38  ;  bi-metallist,  363,  366  ;  — Robert 
J.,  see  Tariff  of  1846 

War,  its  wastes,  42  ;  preparations  for 
it  undesirable,  44,  230  ;  demoraliza- 
tion, 46  ;  associated  with  protec- 
tion, 47  ;  not  the  normal  condition, 
124 

Webster,  Daniel,  exposure  of  "  Amer- 
ican-system "  sham,  22 

Weeks,  Joseph  D.,  on  the  coke  indus- 
try, 311 

Wheat,  in  Dakota  and  India,  184  ; 
protected,  ig8,  281  ;  production 
and  prices,  205  ;  proportion  of  ex- 
ports, 209,  287,  291  ;  grown  in 
Paraguay,  222 ;  and  cotton  ex- 
changed for  tin  plate,  319,  322 

Windom,  William,  reports  as  Secre- 
tary on  subsidies,  137  ;  opposes  free 
coinage,  356 

Wood,  see  Lumber 


Wool,  question  of  free,  27,  13T,  289; 
effects  of  the  duty,  io2,  222,  309, 
315.  339  I  't^  growers  numerous, 
106  ;  gainers  jjy  its  protection,  200, 
283  ;  must  be  compensated,  272 

Woollens,  failures  in  the  business,  27, 
104 ;  degraded  by  wool  protec- 
tion, 102,  290  ;  Tribune  disciplines 
manufacturers,  106  ;  higher  cost 
prevents  exportation,  137  ;  encour- 
agement of  the  manufacture  in  Eng- 
land, 194 ;  compensating  duties, 
201,  272  ;  cost  in  1891,  290 

World,  New  York,  articles  from,  329, 
338,  340  ;  editorial  quoted,  337 


York,  Pennsylvania,  wages  paid  in, 
343.  347  I  memorial  of  35  manu- 
facturers, 349 


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BOOKS  FOR  RAILROAD  MEN,   MANAGERS, 

DIRECTORS,    OFFICIALS,    INVESTORS,  SHIPPERS, 

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RAILWAY  PRACTICE:  Its  Principles  and  Suggested  Re- 
forms Reviewed.  By  E.  Porter  Alexander.  No.  36  in  the  "  Questions  of 
the  Day."     Cloili,  75  cents. 

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— Chicago  Raihvay  Age. 

THE  INTER-STATE  COMMERCE  ACT:  An  Analysis  of  its 
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RAILROAD  TRANSPORTATION:  ITS  HISTORY  AND 
ITS    LAWS.     By  Arthur  T.  Iladley.     8vo,  cloth,  $1.50. 

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a  wide  circulation,  and  should  serve  to  bring  about  an  increased  public  intelligence  on 
the  questions  aflfecling  railroads."' — AVw  Haven  Register. 

RAILROADS   AND    RAILROAD    QUESTIONS.      By  Charles 
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"  Characterized  by  broad,  progressive,  liberal  ideas.''— A'rt//w<z_)'  Reiieiu. 

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AN   INVESTOR'S  NOTES  ON  AMERICAN  RAILROADS. 

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most  direct  way.     His  work  cannot  fail  to  be  of  very  great  value.'' — Chicago  Times. 

THE  DISTRIBUTION  OF  PRODUCTS;  or,  The  Mechanism 
and  the  Metaphysics  of  Exchange.  By  Edward  Atkinson.  .Second 
edition,  much  enlarged.      Svo,  cloth,  $1.50. 

"  Facts  of  general  interest  and  declarations  of  scientific  value.  .  .  .  Clear  and 
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G.  P.  PUTNAM'S  SONS,  New  York  and  London. 


Political  and  Economic  Publications. 


SUMNER  (Prof.  W.  G.).  Lectures  on  the  History  of  Pro- 
tection in  the  United  States.     Octavo  •    So  75 

'    riiere  is  nothing  in  the  literature  of  free  trade  more  forcible  and  effective 
than  this  little  book." — N.    Y.  Evening  Post. 

SCHOENHOF  (J.).  The  Destructive  Influence  of  the  Tariff 
upon  Manufacture  and  Commerce,  and  the  Facts  and  Fig- 
ures Relating  thereto.     Octavo,  cloth         .         .         .         •     $o  75 

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of  the  day." —  The  iVews  and  Courier,  Charleston. 

MOORE  (J.  S.).  Friendly  Sermons  to  Protectionists  and 
Manufacturers.     Octavo,  paper $0  25 

Friendly  Letters  to  American  Farmers  and  Others. 

Octavo,  paper .         .         ,     $0  25 

BASTIAT  (Frederic).     Sophisms  of  Protection.     With  Preface 

by  Horace  White.     i2mo $1  00 

"The  most  telling  statements  of  the  leading  principles  of  the  free-trade 
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"  The  laws  of  an  abstruse  science  have  never  been  made  more  clear,  or 
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ROOSEVELT  (Hon.  Theodore).  Essays  on  Practical  Poli- 
tics.    Octavo,  cloth $0  75 

STERNE  (Simon).     The  Constitutional  History  and  Political 

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RECENT   IMPORTANT   PUBLICATIONS  IN  ECO- 
NOMIC AND   POLITICAL   SCIENCE. 


Atkinson  (Edward).  The  Distribution  of  Products ;  or,  The  Mechanism 
and  the  Metaphysics  of  Exchange.  Three  Essays.  What  Makes  the  Rate 
of  Wages  ?  What  is  a  Bank  ?  The  Railway,  the  Farmer,  and  the  Public. 
Second  edition,  much  enlarged.     8vo         .         .         .         .         .         .         i   50 

"  Facts  of  general  interest  and  deductions  of  scientific  value.     .     .     .     Clear  and   cogent 
method." — Republican ^  Springfield,  Mass. 

The  Industrial  Progress  of  the  Nation.     Consumption  limited  ;  Pro- 


duction unlimited.     8vo,  cloth  .         .         .         .         .         .         .         .         2  50 

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Dunbar  (Charles  F.).    Chapters  on  the  Theory  and  History  of  Banking  i  25 

Gunton  (George).  Principles  of  Social  Economics  Inductively  Considered  and 
Practically  Applied,  with  Criticisms  on  Current  Theories.     8vo  .         i   75 

"  Mr.  Gunton  is  a  fair,  open  fighter, as  even  his  opponents  will  acknowledge,  and  never  seeks 
cover  under  those  threadbare  adjectives  of  recent  economical  literature — '  crude,'  '  unscientific,' 
'illogical,'  and  'sentimental.'  However  widely  many  of  Mr.  Gunton's  fellow-economists  may 
differ  from  him  as  to  his  new  treatment  of  the  more  abstruse  questions  of  political  economy,  all  of 
them  must  acknowledge  that  his  work,  with  its  abundant  statistics  and  its  wealth  of  historical 
references,  is  the  growing  limb  of  a  living  tree,  and  not  the  brittle  branch  of  a  sapless  trunk." — 
Christian  Union. 

O'Neil  (Charles  A.).  The  American  Electoral  System.  An  Analysis  of  its 
Character  and  its  History.      i2mo     .         .         .         .         .         .         .         i  50 

"  The  author's  plans  and  compilations  will  be  found  valuable,  and  the  book  is  well  worth 
having  and  studying." — Ohio  State  Journal. 

Rogers  (James  E.  Thorold).     Six  Centuries   of  Work  and   Wages.     The 

History  of  English  Tabor  (1250-1883).     8vo  ....  3  00 

The  Economic  Interpretation  of  History.     Being  the  Substance  of 

Lectures  Delivered  in  Worcester  Hall,  Oxford  University  (1887-8).    8vo.   3  00 

"  The  author  supports  his  arguments  by  so  many  strong  considerations,  that  he  is  entitled  to 
the  patient  study  of  all  who  are  interested  in  economic  subjects,  and  especially  of  those  who  feel 
that  the  social  problem  is  by  no  means  solved,  in  the  accepted  Political  Economy,  and  needs  other 
and  more  organic  remedies  than  are  suggested  in  the  orthodox  treatises." — N.  Y.  Commercial 
Advertiser. 

Taussig  (Prof.  F.  W.).  The  Tariff  History  of  the  United  States,  1789- 
1888.  Comprising  the  material  contained  in  "  Protection  to  Young  Industries" 
and  "  History  of  the  Present  Tariff,"  together  with  the  revisions  and  additions 
needed  to  complete  the  narrative.     i2mo  .         .         .         .         .         I  25 

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a  wide  range  of  facts,  covering  our  whole  national  history." — Christian  Register. 

Wells  (David  A.).  Practical  Economics.  A  Collection  of  Essays  respecting 
certain  of  the  Economic  Experiences  of  the  United  States.     8vo         .         i   50 

"In  my  clear  opinion,  it  is  the  most  comprehensive,  conclusive,  and  poweiful  statement  of 
the  truth  respecting  freedom  of  exchange,  as  to  theory  and  as  to  practice,  that  e.^ists  in  any  lan- 
guage or  literature?' — Manton  Marble. 

*i^  Catalogue  of  publications  in  Economic  and  Political  Science  sent  on  application. 

G.    P.    PUTNAM'S    SONS, 

27  &  29  West  23D  Street,  New  York. 


This  book  is  DUE  on  the  last  date  stamped  below 


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